K 


• 


THE    CITIZEN'S    LIBRARY  OF    ECONOMICS, 
POLITICS  AND  SOCIOLOGY— NEW  SERIES 


EDITED  BY  RICHARD  T.  ELY,  PH.D.,  LL.D. 

PROFESSOR    OF    POLITICAL    ECONOMY   IN   THE    UNIVERSITY   OF   WISCONSIN 


THE  WEALTH  AND  INCOME 

OP  THE 

PEOPLE  OF  THE  UNITED  STATES 


THE   CITIZEN'S   LIBRARY   OF  ECONOMICS, 
POLITICS  AND  SOCIOLOGY 


EDITED    BT 

RICHARD  T.  ELY,  PH.D.,  LL.D. 

PBOFESSOB   OT  POLITICAL  ECONOMY  IN  THE   UNIVERSITY  OT  WISCONSIN 


NEW  SERIES 

THE    PROGRESSIVE    MOVEMENT.      BT    BENJAMIN   P. 
DEWITT,  M.A.,  LL.B. 

THE   WEALTH  AND  INCOME  OF   THE   PEOPLE   OP 
THE  UNITED  STATES.    BY  WILLFOBD  I.  KING,  PH.D. 

AMERICAN     MUNICIPAL    PROGRESS.       BY    CHARLES 
ZUEBLIN.    New,  revised  and  enlarged  edition.    In  press. 

THE  SOCIAL  PROBLEM.    BY  CHARLES  A.  ELLWOOD,  PH.D. 


V 

THE  WEALTH  AND  INCOME 


OF    THE 


PEOPLE  OF  THE  UNITED  STATES 


BY 

WILLFORD  ISBELL  KING,  Pn.D. 

INSTBUCTOB   IN    STATISTICS  IN   THE    UNIVIBSITT   OT    'WISCONSIN 


LIBRA  HV    QF 

SAVIH3S  UNION 


NEW  YORK 
THE  MACMILLAN  COMPANY 

LONDON:  MACMILLAN  &  CO.,  LTD. 
1917 


COPYRIGHT,  1915 
BY  THE  MACMILLAN  COMPANY 


Set  up  and  electrotyped.    Published  June,  1915. 
Reprinted  July,  1917.  x 


6 


KS 


DEDICATED 

TO 
MY  WISE  COUNSELLOR 

AND 

HELPFUL  FRIEND 

RICHARD   T.   ELY,   LL.D. 

OP 

THE  UNIVERSITY  OF  WISCONSIN 


PREFACE 

ABOUT  a  year  and  a  half  ago,  the  author  had 
occasion  to  make  a  brief  study  of  the  national  dividend 
in  the  United  States;  its  size  both  absolutely  and  in 
comparison  with  the  dividends  of  one  or  two  European 
countries;  and  the  possibilities  of  its  increase.  Pro- 
fessor Richard  T.  Ely  listened  to  the  reading  of  the 
paper  and  later  saw  fit  to  incorporate  it  as  an  appendix 
to  his  able  work  on  Property  and  Contract  in  their 
Relations  to  the  Distribution  of  Wealth.  Professor 
Ely  also  suggested  that  the  topic  was  one  of  sufficient 
importance  to  warrant  its  expansion  into  a  small 
volume.  The  suggestion  was  accepted  and,  since 
that  time,  the  original  study  has  been  thoroughly 
revised  and  decidedly  extended.  The  author  is 
indebted  to  Professor  Ely  for  many  helpful  suggestions 
and  criticisms,  to  Mr.  Ray  S.  Trent,  of  the  University 
of  Wisconsin,  for  much  assistance  in  collecting  and 
compiling  data,  and  to  several  students  of  statistics 
for  preliminary  work,  necessary  in  clearing  the  way 
for  some  phases  of  the  study.  Mrs.  Ray  S.  Trent, 
Mr.  Robert  C.  Williamson,  Mr.  Reuben  V.  Gunn  and 
Mr.  Kenneth  Duncan  have  given  valuable  assistance 
by  reading  and  criticizing  portions  of  the  manuscript. 

vii 


Viil  PREFACE 

The  reader  of  this  book  will  do  well  to  bear  in  mind 
that  there  are  two  broad  varieties  of  concrete  statis- 
tical studies:  first,  those  depending  on  the  correct 
counting  of  many  individual  items;  second,  those 
consisting  of  estimates  based  on  counts  made  by 
others.  This  study  is  distinctly  in  the  latter  class. 
The  estimates  have  been  made,  in  most  instances, 
from  fragmentary  material  gathered  by  different 
persons  at  different  times  and  for  different  purposes. 
In  some  cases,  the  original  counts  (principally  by 
government  officials)  were  doubtless  faulty,  but  only 
when  the  errors  were  evident  has  the  author  attempted 
to  go  behind  the  returns  and  criticize  the  validity  of 
government  reports.  Frequently,  estimates  have 
been  made  on  the  basis  of  assumptions  that  are 
possibly  decidedly  erroneous.  In  some  cases,  details 
were  filled  in  by  the  use  of  careful  guesses  based  on 
general  information  only. 

The  critics  will  immediately  assert  that  such 
methods  are  useless  and  that  the  results  are  not 
worth  the  paper  upon  which  they  are  printed.  To 
this  view  the  author  takes  exception.  The  primary 
value  of  statistics  is  usually  due  to  relative  rather 
than  to  absolute  accuracy.  It  is  believed  that  the 
figures  cited  are,  in  most  instances,  sufficiently  ac- 
curate to  justify  fully  the  conclusions  made  concerning 
relative  sizes,  amounts,  or  changes.  An  effort  has 
been  made  to  state  fairly  the  probabilities  of  error 


PREFACE  ix 

in  each  case  and  to  convey  in  no  instance  any  false 
impression  of  exactitude.  The  greatest  possibilities 
of  error  are  usually  in  the  less  important  details  and 
errors  of  this  kind  seldom  can  be  great  enough  to 
vitiate  seriously  the  totals  arrived  at.  Whenever 
possible,  the  major  conclusions  have  been  verified  by 
independent  methods  and  from  different  sources  of 
information.  The  closeness  with  which  most  of  these 
independent  estimates  have  checked  has  frequently 
been  both  surprising  and  gratifying. 

The  general  sources  of  information  and  methods  of 
procedure  have  usually  been  indicated  either  in  the 
text  or  in  a  footnote.  It  has  seemed  unwise  to  at- 
tempt to  trace  in  full  all  the  methods  used,  for  they 
have  been  so  diverse  and  involved  that  their  descrip- 
tion in  detail  would  require  several  volumes  as  large 
as  this  one.  Neither  has  any  attempt  been  made  to 
give  exact  page  references  to  all  reports  used.  Figures 
have  been  taken  from  dozens  or  even  hundreds  of 
places  in  many  of  the  sources  cited,  and  to  state  the 
origin  of  each  number  would  be  to  make  the  work 
so  cumbersome  as  to  discourage  the  average  reader. 
This  study  is  intended  to  give  an  impressionistic 
picture  of  the  subject  under  consideration  and  to 
convey  a  correct  idea  as  to  the  general  supply  and 
distribution  of  wealth  and  income.  While  no  little 
effort  has  been  expended  in  estimating  and  reesti- 
mating,  checking  and  rechecking  with  a  view  to 


x  PREFACE 

obtaining  a  degree  of  accuracy  consistent  with  the 
time  and  materials  available  and  sufficient  for  the 
purposes  involved,  in  most  parts  of  the  book,  there 
has  been  no  attempt  made  to  render  the  details  exact 
or  to  enter  into  minutiae.  The  author  has  sought  to 
make  his  ideas  clear  to  every  reader  of  good  education 
rather  than  to  present  a  study  intelligible  only  to  the 
technical  student  of  statistics.  It  seems  quite  certain 
that  it  is  absolutely  impossible  from  the  sources  at 
hand  to  construct  a  technically  accurate  statistical 
answer  to  the  questions  about  wealth  and  income 
concerning  which  the  thinking  public  wish  informa- 
tion. Numerous  monographs  and  great  bulky  vol- 
umes of  figures  have  been  skilfully  prepared  which 
admirably  cover  various  phases  of  the  question. 
The  author  knows  of  no  serious  attempt,  since  that 
made  by  Dr.  C.  B.  Spahr  some  two  decades  ago,  to 
coordinate  these  studies  into  a  connected  whole. 
Separately,  they  are  of  practically  no  value  to  the 
ordinary  citizen.  Yet  these  careful  studies  made 
by  the  government  or  by  independent  workers  at 
great  expense  and  effort  contain  hidden  away  therein 
many  broad  truths  which  should  be  brought  before 
the  public.  A  knowledge  of  some  of  these  facts  is 
necessary  to  enable  one  to  determine  the  course  of 
political  action  which  will  best  favor  the  advancement 
of  the  nation. 

The  purpose  of  this  book  is  to  present  some  of  these 


PREFACE  xi 

important  facts  in  a  clear,  comprehensible  form. 
Its  existence  is  justified  exactly  in  the  measure  that 
this  purpose  has  been  attained. 

WILLFOBD  I.  KING. 

THE  UNIVERSITY  OP  WISCONSIN, 
April  17,  1915. 


CONTENTS 


CHAPTER  I 

MM 

INTBODUCTTON 1 

CHAPTER  II 

WEALTH 5 

CHAPTER  III 
CHANGES    IN    THE    SOCIAL    WEALTH    OF    THE 

AMERICAN  PEOPLE 13 

The  land  supply 15 

Urban  land 15 

Agricultural  land 22 

Grazing  land 28 

Forests 31 

Mineral  resources 33 

Summary 40 

The  supply  of  capital 41 

The  supply  of  consumption  goods 46 

CHAPTER  IV 

THE  DISTRIBUTION  OF  WEALTH  AMONG  FAMILIES  50 

What  distribution  of  wealth  is  best? 50 

The  existing  distribution  of  wealth 64 

Average  wealth 103 

xiii 


xiv  CONTENTS 

nun 

CHAPTER  V 

INCOME  DEFINED 106 

Book  income 108 

Income  in  purchasing  power 113 

Real  income 114 

CHAPTER  VI 

THE  NATIONAL  INCOME  AND  THE  INDUSTRIES 

THAT  PRODUCE  IT 124 

The  national  income 124 

The  national  dividend 132 

Industrial  shares  of  the  national  income. . .   136 

CHAPTER  VII 

THE  DISTRIBUTION  OF  THE  NATIONAL  INCOME 

AMONG  THE  FACTORS  OF  PRODUCTION 154 

The  share  of  land 156 

The  shares  of  capital  and  the  entrepreneur. .   162 
The  share  of  labor 163 

CHAPTER  VIII 

THE  SHARE  OF  THE  CORPORATION  IN  THE  TOTAL 

NATIONAL  PRODUCT 208 

CHAPTER  IX 

THE  DISTRIBUTION  OF  INCOME  AMONG  FAMILIES  217 
The  income  shares  of  the  various  classes. . .   217 
The  relation  of  average  income  to  population 
density 238 

APPENDIX.  .  .  256 


LIST  OF  TABLES 


NO.  OF  TABLE  PAGB 

I.     The  Money  Value  of  the  Economic 
Goods  Possessed  by  the  People 
of  the  Continental  United  States     13 
II.     The  Estimated  Rural  and   Urban 

Population  of  the  United  States.     16 

III.  Land  in  Farms  in  the  United  States    23 

IV.  Acre  Yields  of  Leading  Crops  in  the 

United  States 25 

IVA.     The  Number  of  Cattle  and  Sheep 
on   Farms   and   Ranges   in  the 

United  States 29 

V.     Production  of  Important  Minerals 

in  the  Continental  United  States    34 
VI.     The  Estimated  Value  of  the  Supply 
of  Active  Capital  in  the  Conti- 
nental United  States 43 

VII.    The  Quantity  of  Active  Capital  in 

the  United  States 44 

VIII.     The  Estimated  Value  and  Quantity 
of   Consumption   Goods   in   the 

United  States 48 

IX.  The  Estimated  Distribution  of 
Estates  of  Men  Dying  in  Massa- 
chusetts    68 

XV 


xvi 


LIST  OF  TABLES 


NO.  Ot   TABLE 

X.  Cumulative  Percentages  of  the 
Number  and  Value  of  Estates  of 
Men  Dying  in  Massachusetts.  . .  70 
XI.  The  Estimated  Distribution,  Ac- 
cording to  Value,  of  the  Estates 
of  Men  Dying  in  Wisconsin  in 
1900 76 

XII.  Cumulative  Percentages  of  the 
Number  and  Value  of  Estates  of 
Men  Dying  in  Wisconsin  in  1900  77 

XIII.  Holdings  of  Different  Fractions  of 
the  Population  Classified  Ac- 
cording to  Wealth 79 

XIV.  Distribution,  According  to  Value, 
of  Estates  Probated  in  France  in 

1909 87 

XV.  Cumulative  Distribution,  Accord- 
ing to  Value,  of  Estates  Probated 
in  France  in  1909 88 

XVI.  The  Estimated  Distribution  of 
Wealth  among  Men  over  Twenty- 
Five  Years  of  Age  Dying  in  the 
United  Kingdom,  1907-1911...  89 
XVII.  The  Estimated  Distribution  of 
Wealth  among  Men  over  Twenty- 
Five  Years  of  Age  Dying  in  the 
United  Kingdom,  1907-1911, 

(Cumulative) 90 

XVIII.  The  Distribution  of  Wealth  among 
Prussian  Families,  Estimated 
from  Tax  Assessments  for  1908 . .  91 


LIST  OF  TABLES 


NO.  OF    TABLE  PAGE 

XIX.     The  Distribution  of  Wealth  among 
Prussian     Families,     Estimated 
from  Tax  Assessments  for  1908 
(Cumulative)  .................     92 

XX.  The  Money  Value  of  Property  of 
Different  Fractions  of  the  Popu- 
lation in  Various  Countries  .....  96 

XXI.    The    Estimated    Income    of    the 
People  of  the  Continental  United 
States  .......................   129 

XXII.  The  National  Dividend  for  the 
Continental  United  States,  Meas- 
ured in  Purchasing  Power  ......  132 

XXIII.  The  Estimated  Industrial  Distri- 

bution  of   the   National   Value 
Product  ............  .  ........   13'8 

XXIV.  The  Estimated  Percentages  of  the 

Total    Value    of    the    National 
Income  Produced  by  each  Gen- 
eral Field  of  Industry  in  the  Con- 
tinental United  States  .........   140 

XXV.    The  Estimated  Changes  in  the  Per 
Capita  Expense  of  Government 
for  the  Continental  United  States  143 
XXVI.    The    Estimated    Changes    in    the 
Total  Production  and  in  the  Per 
Capita  Production  and  Supply 
of  Manufactured  Articles  in  the 
Continental  United  States  ......   144 

XXVII.     The    Estimated    Changes    in    the 
Total  Production  and  in  the  Per 


XV111 


LIST  OF  TABLES 


NO.  OF   TABLE 


XXVIII. 


XXIX. 


XXX. 


XXXI. 

XXXII. 

XXXIII. 
XXXIV. 


Capita  Production  and  Supply 
of  Water,  Rail,  and  Wire  Trans- 
portation for  the  Continental 
United  States 146 

The  Estimated  Changes  in  the 
Total  Production  and  in  the  Per 
Capita  Production  and  Supply 
of  Mineral  Products  for  the  Con- 
tinental United  States 149 

The  Estimated  Changes  in  the 
Total  Production  and  in  the  Per 
Capita  Production  and  Supply  of 
Agricultural  Products  for  the 
Continental  United  States 150 

The  Estimated  Total  National  In- 
come Divided  into  Rent,  Inter- 
est, Profits,  and  Returns  to 
Employees;  for  the  Continental 
United  States 158 

The  Estimated  Percentages  of  the 
Total  National  Income  Received 
Respectively  by  Labor,  Capital, 
Land,  and  the  Entrepreneur. .  . .  160 

The  Estimated  Returns  for  Per- 
sonal Efforts  in  the  Continental 
United  States 168 

Indices  of  Average  Prices  of  Com- 
modities, for  the  United  States . .  180 

Indices  of  Commodity  Prices  and  of 
Hourly  Wages  for  Men  in  All 
Industries . .  189 


LIST  OF  TABLES 


xix 


NO    OF    TABLE  PAGE 

XXXV.  Relative  Prices  of  Commodities  and 
Men's  Labor  per  Hour  in  All 

Industries 190 

XXXVI.     Relative  Prices  of  Commodities  and 
Women's    Labor    per    Hour    in 

Manufacturing 194 

XXXVII.     Indices  of  the  Price  of  Labor  per 
Hour  for  Male  Wage  Earners  in 

Various  Industries 195 

XXXVIII.  Indices  of  Commodity  Prices  and  of 
Daily  Wages  for  Men  in  all  In- 
dustries    198 

XXXIX.     Relative  Prices  of  Commodities  and 
Men's  Labor  per  Week  in  All 

Industries 199 

XL.     Relative  Prices  of  Commodities  and 
Women's    Labor    per    Week    in 

Manufacturing 202 

XLI.     Indices  of  the  Price  of  Labor  per 
Week  for  Male  Wage  Earners  in 

Various  Industries 203 

XLII.     Estimated  Recent  Changes  in  Cor- 
porate Incomes 211 

XLIII.  The  Estimated  Distribution  of  In- 
come among  the  Families  of  the 
Continental  United  States  in 

1910 224 

XLIV.  The  Estimated  Percentage  Distri- 
bution of  Income  in  the  Conti- 
nental United  States  in  1910 . .  .228 


LIST  OF  TABLES 

NO.  OF  TABLE  PAGB 

XLV.  The  Estimated  Distribution  of  In- 
come among  the  Prussian  Popu- 
lation in  1910 233 

XL VI.  The  Estimated  Distribution  of  In- 
come among  the  Prussian  Popu- 
lation in  1910  (Cumulative) 234 

XLVII.  The  Money  Income  of  Different 
Fractions  of  the  Population  in 
Prussia  and  in  the  United  States 

in  1910 235 

VIA.     The  Estimated  Value  of  Business 

Buildings  in  the  United  States . .   256 
Vis.     The  Estimated   Value  of  Capital 
Used    by    Railways    and    other 
Public  Utilities  in  the  Continental 

United  States 257 

Vic.  The  Estimated  Value  of  the  Mov- 
able Machinery  and  Tools  in  Use 
in  the  Continental  United  States  258 
VIIlA.  The  Estimated  Value  of  Consump- 
tion Goods  in  the  Continental 
United  States 259 

XXXA.  Wages  and  Salaries;  All  Returns 
Ascribed  to  Employees,  by  Em- 
ployments, for  the  Continental 
United  States 260 

XXXs.  Interest;  Value  Product  Ascribed  to 
Capital,  Classified  According  to 
the  Use  of  the  Capital,  for  the 
Continental  United  States.  .  .261 


LIST  OF  TABLES 


xxi 


MO.  OF  TABLE 

XXXc. 


XXXD. 


XXXIlA. 


XXXVlA. 


XXXVIlA. 


Rent;  Value  Product  Ascribed  to 
Land,  Classified  According  to  the 
Use  of  the  Land,  for  the  Conti- 
nental United  States 262 

Profits;  All  Returns  Ascribed  to  the 
Efforts  of  Entrepreneurs,  by  Em- 
ployment, for  the  Continental 
United  States 263 

The  Estimated  Distribution  of 
Persons  Gainfully  Employed  in 
the  Continental  United  States . .  264 

Indices  of  the  Price  of  Labor  per 
Hour  for  Female  Wage  Earners 
in  Important  Manufacturing  In- 
dustries    265 

Indices  of  the  Price  of  Labor  per 
Hour  for  Male  Wage  Earners  in 
Manufacturing  Industries 266 


LIST  OF  DIAGRAMS 


PAGE 

1.  Urban  and  Rural  Population  of  the  United 

States 18 

2.  Per  Capita  Supply  of  Cattle  and  Sheep  on  the 

Farms  and  Ranges  of  the  United  States . .     30 

3.  Per  Capita  Supply  of  Active  Capital  and  Con- 

sumption Goods  in  the  United  States ....     45 

4.  Distribution  of  Estates — Massachusetts  and 

Wisconsin 72 

5.  Distribution  of  Estates  of  the  Rich — Massa- 

chusetts and  Wisconsin 74 

6.  Fractions  of  Wealth  belonging  to  Different 

Classes  of  the  Population — Massachusetts 
and  Wisconsin 81 

7.  Relative  Wealth  of  Each  Class  of  the  Popu- 

lation— Massachusetts  and  Wisconsin ....     85 

8.  Relative  Distribution  of  Wealth  in  Wisconsin 

and  European  Nations 93 

9.  Relative  Distribution  of  Wealth  among  Rich 

in  Wisconsin  and  European  Nations 94 

10.  Division  of  Wealth  among  Classes  in  Various 

Countries 97 

11.  Absolute    Wealth,    by    Classes,    in    Various 

Countries 99 

12.  Wealth  of  People  of  Various  Countries  Rel- 

ative to  that  of  Wisconsin 104 

13.  Per  Capita  Income  in  Money  and  Purchasing 

Power  for  the  United  States 130 

14.  Division    of    National    Income    among    In- 

dustries    139 

xxiii 


:cdv  LIST  OF  DIAGRAMS 

PAGE 

15.  Relative  Division  of  the  National  Income 

among  Industries 141 

16.  Output   per   Worker   in   Various   Fields   of 

Industry 147 

17.  Per  Capita  Supply  of  Products  from  Various 

Industries 151 

18.  Distribution  of  the  National  Income  among 

the  Factors  of  Production.  159 

19.  Relative  Distribution  of  the  National  Income 

among  the  Factors  of  Production 161 

20.  Average  Annual  Wages  and  Profits  in  Money 

and    Purchasing    Power    for   the    United 
States 169 

21.  Relative  Prices  of  Labor  and  Commodities  in 

the  United  States 192 

22.  Relative  Trends  of  Wages  per  Hour  in  Differ- 

ent Industries 196 

23.  Wages  per  Hour  Compared  for  Different  In- 

dustries     197 

24.  Relative  Changes  in  Commodity  Prices  and 

the  Earnings  of  Men 200 

25.  Comparative   Weekly   Earnings   in   Various 

Industries 204 

26.  Comparative  Distributions  of  Income  in  the 

United  States  and  Prussia 227 

27.  The  Relative  Distribution  of  the  Incomes  of 

the  Rich  in  the  United  States  and  Prussia  230 

28.  Division  of  Income  among  Classes  in  the 

United  States  and  Prussia 236 

29.  Per  Capita  Money  Incomes  in  the  United 

States  and  Prussia.  .   237 


THE  WEALTH  AND  INCOME 

OP   THE 

PEOPLE  OF  THE  UNITED  STATES 


CHAPTER  I 

INTRODUCTION 

IT  is  a  self-evident  fact  that  the  inventions  and 
discoveries  of  the  last  two  generations  have  revo- 
lutionized the  productive  forces  of  the  American 
nation.  In  less  than  a  century,  the  growth  of  popu- 
lation has  changed  a  region  consisting  largely  of  a 
sparsely  settled  wilderness  into  a  vast  industrial 
empire.  Our  agriculture  has  made  great  advances, 
but  the  development  of  cities  has  been  even  more 
striking.  All  this  has  been  so  often  told  and  retold 
that  it  has  become  the  merest  commonplace  to  every 
schoolboy.  But  when  we  come  to  a  closer  analysis 
of  this  tremendous  advance,  we  find  that  even  the 
principal  features  of  the  picture  are  far  from  clear. 
Everyone  is  aware  that  wealth  has  increased;  most 
people  feel  sure  that  the  average  American  of  to-day 
is  richer  than  the  average  American  of  fifty  years 
ago;  further  than  this,  few  can  go  with  any  degree  of 
certainty. 

But,  in  the  present  time  of  searching  inquiry  into 
the  fundamentals  of  economics  and  politics,  people 
wish  to  know  more  than  this.  They  are  not  satisfied 
with  the  assurance  that  the  accumulation  of  wealth 
within  the  nation  is  increasing.  It  is  not  enough  to 
2  1 


2  WEALTH  AND  INCOME  OF 

know  that  the  total  income  is  greater  than  formerly. 
Nowadays,  it  is  demanded  that  the  economist  bring 
forth  a  more  complete  picture  of  the  change  that  has 
been  going  on.  Many  difficult  questions  are  pro- 
pounded. If  wealth  and  income  are  increasing,  is 
not  population  increasing  faster?  Is  not  the  increase 
of  wealth  recorded  in  the  statistical  reports  of  our 
government  merely  an  illusion  arising  from  fluctua- 
tions in  the  supply  of  the  medium  of  exchange?  If 
there  has  been  an  increase  in  the  riches  of  the  nation 
as  a  whole,  has  the  increase  been  distributed  to  all 
classes  of  the  population,  or  have  the  benefits  been 
monopolized  by  a  favored  few?  Are  the  landlords, 
the  capitalists,  the  captains  of  industry,  or  the  wage- 
earners  receiving  the  principal  share  of  the  fruits  of 
progress?  Each  of  these  questions  has  been  the 
subject  of  excited  controversy,  but,  in  the  majority 
of  instances,  neither  party  to  the  debate  has  been 
able  to  reinforce  his  opinions  with  any  evidence 
worthy  of  consideration,  and  hence  it  has  been  im- 
possible to  reach  an  agreement.  The  economist,  in 
studying  these  questions,  has  been  hampered  by  lack 
of  statistical  information  on  the  subject.  With  the 
exception  of  Charles  B.  Spahr's  work,  entitled  The 
Present  Distribution  of  Wealth  in  the  United  States, 
all  studies  in  this  line  have  been  admittedly  incom- 
plete and  fragmentary.  The  book  mentioned  was 
published  more  than  twenty  years'  ago,  and,  in  the 


THE  PEOPLE  OF  THE  UNITED  STATES     3 

interim,  statistical  science  has  made  so  much  progress 
and  government  reports  have  become  so  much  more 
accurate  and  complete  that  it  seems  possible  and 
desirable  again  to  attempt  a  study  which  will  eluci- 
date some  of  the  questions  mentioned  above.  As 
statisticians  are  well  aware,  the  incompleteness  of 
the  earlier  census  reports,  the  lack  of  uniformity  of 
the  different  censuses,  and  the  absence  of  information 
on  the  exact  points  needed  to  throw  light  on  the 
topics  under  discussion  render  futile,  in  the  great 
majority  of  cases,  any  attempt  to  set  forth  authorita- 
tive or  exact  statements.  The  best  that  can  be 
hoped  for  is  to  arrive  at  estimates  near  enough  to 
the  truth  and  with  a  small  enough  degree  of  error  to 
make  it  possible  to  draw  a  few  broad  but  practically 
certain  conclusions. 

As  we  approach  the  present  time,  the  statistics 
become  more  and  more  complete  and  accurate,  and, 
when  we  arrive  at  the  censuses  of  1900  and  1910,  we 
may  accept  the  results  with  a  very  considerable 
degree  of  confidence.  Not  only  the  Census  Bureau 
but  many  other  governmental  departments  have,  in 
the  last  score  of  years,  greatly  increased  both  the 
quantity  and  quality  of  their  statistical  data.  A 
study  is,  therefore,  now  rendered  possible  which 
covers  in  a  general  way  a  period  of  sixty  years  be- 
ginning with  1850.  For  the  first  few  decades,  only 
the  broad  outlines  are  trustworthy,  but,  as  the  end 


of  the  nineteenth  century  approaches,  the  facts 
become  clearer  and  clearer  and,  after  the  advent  of 
the  Twelfth  Census,  one  can  proceed  to  analyze  the 
figures  in  very  considerable  detail  with  a  comfortable 
feeling  of  assurance  that  the  results  are  approximately 
correct. 


CHAPTER  II 
WEALTH 

BEFORE  beginning  any  investigation,  it  is  abso- 
lutely essential  that  the  problem  to  be  solved  shall  be 
stated  in  such  a  form  as  to  be  perfectly  clear  and 
definite.  What  are  the  facts  about  which  we  wish 
to  secure  information?  Since  a  number  of  problems 
are  to  be  considered  in  the  following  pages,  each  will 
be  stated  separately  in  its  proper  place.  These 
problems  will  deal  mainly  with  wealth  and  income. 
Just  what  is  wealth?  How  does  it  differ  from  income? 
Different  authorities  define  these  terms  in  various 
ways.  The  exact  definition  is  not  so  important  as  is 
the  necessity  of  adopting  some  clear-cut  description 
of  each  term  and  then  consistently  adhering  through- 
out to  this  meaning.  The  ideas  embodied  in  the 
definitions  which  follow  are  intended  to  be  as  nearly 
as  possible  in  accord  with  the  best  usage  of  the  leading 
present-day  economists.  Since  these  economists  do 
not  agree  on  any  set  form  of  stating  their  ideas,  the 
wording  is  that  of  the  present  author. 

It  has  proved  impossible  to  give  any  definition  of 
the  term  wealth  which  does  not  include  two  distinct 
and  yet  overlapping  ideas.  Individuals  are  said  to 
be  wealthy  when  they  possess  bonds,  notes,  mortgages, 

5 


6  WEALTH  AND  INCOME  OF 

or  stock  in  corporations.  These  evidences  of  title  are, 
however,  no  part  of  the  riches  of  the  nation.  If  every 
paper  of  the  sort  were  destroyed,  the  country,  as  a 
whole,  might  be  little,  if  any,  poorer.  Its  factories, 
stores,  residences,  farms,  and  mines  would  still  exist. 
One  citizen  would  have  gained  at  the  expense  of 
another,  but  the  total  wealth  of  society  might  be 
practically  undiminished.  On  the  other  hand,  when 
a  building  burns  the  individual  may  be  recompensed 
by  insurance,  but  the  loss  is  simply  paid  for  by  the 
policy  holders  in  the  company.  The  loss  to  society 
as  a  whole  is  approximately  as  great  as  if  there  had 
been  no  insurance  whatever.  Certain  individuals 
may  profit  enormously  by  the  increase  in  land  values 
due  to  the  growth  of  a  great  city,  but  the  masses  of 
the  people  will  probably  be  forced  by  this  same 
growth  to  travel  far  to  their  work  or  to  live  in  crowded 
quarters  amid  the  smoke  and  dust  of  busy  thorough- 
fares. In  this  case,  the  individual  wealth  of  a  small 
fraction  of  the  population  has  greatly  increased,  the 
wealth  of  the  remainder  of  the  inhabitants  may  also 
have  increased  if  measured  in  dollars  and  cents,  but, 
evidently,  their  real  welfare  has  been  decidedly 
diminished.  The  average  of  social  well-being  has 
fallen  off.  Economists,  therefore,  have  found  it 
essential  to  distinguish  between  the  ideas  of  private 
wealth,  public  wealth,  and  social  wealth. 
Private  wealth  consists  of  material  goods,  claims 


THE  PEOPLE  OF  THE  UNITED  STATES     7 

to  such  goods  or  to  services,  or  evidences  of  those 
claims  possessed  by  an  individual  or  group  of  indi- 
viduals at  a  given  time.  Thus,  a  man  may  own  a 
farm,  a  store  with  an  established  business  and  good 
will,  stock  in  a  corporation,  and  greenbacks  in  his 
cash  drawer.  All  these  articles  are  part  of  his  indi- 
vidual wealth.  The  United  States  Steel  Corporation 
possesses  mines,  railways,  ships  and  factories,  as  well 
as  stocks  and  bonds  of  other  corporations,  monopoly 
privileges,  etc.  All  these  constitute  the  corporate 
wealth  of  the  organization.  Both  individual  and 
corporate  wealth  are  forms  of  private  wealth.  The 
United  States  Government  possesses  thousands  of 
public  buildings,  the  great  canal  at  Panama,  fleets 
of  ships,  and  vast  quantities  of  valuable  minerals  and 
growing  timber.  In  addition,  it  may  own  stocks, 
bonds,  mortgages,  and  securities  and  it  always  has 
quantities  of  money  of  various  kinds.  All  these  things 
constitute  the  public  wealth  of  the  United  States 
Government.  Similarly,  states,  counties,  cities,  and 
townships  possess  many  valuable  things  all  included 
in  a  list  of  their  public  wealth.  Evidently,  public 
wealth  differs  from  private  wealth  only  in  the  point 
of  ownership.  We  may,  therefore,  define  public 
wealth  thus:  Public  wealth  consists  of  material  goods, 
claims  to  such  goods,  or  to  services,  or  evidences  of 
these  claims  possessed  by  some  governmental  body 
or  organization. 


8  WEALTH  AND  INCOME  OF, 

The  concept  of  social  wealth  is  easy  to  define,  not 
hard  to  grasp,  but  decidedly  difficult  to  subject  to 
measurement.  The  idea  is  thus  set  forth:  Social 
wealth  consists  of  the  aggregate  stock  of  material 
goods  possessed  at  the  given  time  by  the  given 
segment  of  society.  Social  wealth  therefore  is 
measured  in  utility  and  not  in  value.  The  value  of 
the  total  stock  of  a  commodity  often  increases  as  the 
quantity  grows  less,  but  total  utility  is  likely  to  be 
greatly  increased  by  abundance.  Value  is  merely  an 
exchange-ratio  between  different  utilities.  Only  in- 
directly can  value  be  used  as  a  measure  of  social 
wealth,  yet  statistical  inquiries  concerning  wealth 
are  always  made  in  terms  of  value.  This  fact  renders 
difficult  any  bona  fide  comparison  between  wealth 
at  different  times  and  places. 

Besides,  only  economic  goods  have  value,  that  is 
only  those  goods  which  are  too  scarce  to  satisfy  all 
wants  for  them.  At  the  present  time,  this  is,  doubt- 
less, a  very  important  part  of  all  goods,  but  it  does  not 
constitute  the  whole  of  social  wealth  by  any  means. 
Social  wealth  includes  not  only  houses  and  lands, 
mines  and  live  stock,  farms  and  factories,  clothing 
and  furniture,  but  also  the  great  mass  of  useful  things 
generally  known  as  free  goods.  Under  this  heading, 
we  place  seas,  rivers,  harbors,  forests,  climate,  and 
scenery.  Many  of  the  richest  treasures  of  mankind 
are  free  goods;  that  is,  they  exist  so  abundantly  that 


THE  PEOPLE  OF  THE  UNITED  STATES     9 

all  can  share  therein.  A  large  fraction  of  the  com- 
merce of  the  world  is  carried  upon  the  high  seas,  but 
there  is  no  toll  for  the  use  of  the  ocean  pathway. 
How  much  would  the  Mississippi  valley  be  worth  if 
its  climate  were  arid?  Yet,  there  is  no  charge  for  the 
rainfall.  There  is  no  price  set  upon  Colorado  sun- 
shine or  ocean  bathing,  but  both  have  been  important 
factors  in  contributing  to  American  well-being. 

Many  authors  have  included  as  part  of  the  social 
wealth  the  great  stock  of  accumulated  knowledge 
handed  down  to  us  by  our  forefathers  and  the  intri- 
cate industrial,  commercial,  and  governmental  organi- 
zation of  society  at  the  present  time.  The  importance 
of  these  things  cannot  be  overestimated.  Without 
them,  we  should  be  compelled  again  to  toil  up  the 
long  tiresome  incline  from  barbarism  to  modern 
civilization;  yet  it  seems  best  to  classify  these  not  as 
wealth  but  as  conditions  making  the  accumulation  of 
wealth  possible.  A  man  may  be  learned  in  the  ex- 
treme and  live  amongst  books  representing  the  wisdom 
of  the  ages;  he  may  dwell  in  a  great  industrial  nation 
with  a  thoroughly  modern  form  of  organization;  but  if 
he  owns  no  property  he  would  not  ordinarily  be  con- 
sidered wealthy.  Wealth,  whether  of  persons  or  of 
nations,  refers  rather  to  actual  accumulations  of  tan- 
gible things  than  to  the  power  of  amassing  such  riches. 

Social  wealth  is  commonly  divided  into  three  great 
categories  which  may  be  designated: 


10  WEALTH  AND  INCOME  OF 

1.  Productive  Natural  Resources. 

2.  Capital. 

3.  Consumption  Goods. 

Productive  Natural  Resources  are  varied  in  nature 
and  character.  Under  this  head,  may  be  placed  land 
including  not  only  area,  but  soil,  fertility,  location, 
climate,  and  topography.  Likewise,  forests,  stores  of 
mineral  resources,  water-  and  wind-power,  rivers, 
seas  and  oceans  are  all  free  gifts  of  nature  which 
aid  man  in  producing  further  wealth. 

Social  Capital  includes  all  those  products  of  past 
industry  used  in  the  further  production  of  social 
wealth.  It  differs  from  productive  natural  resources 
in  that  labor  has  been  involved  in  its  production.  It 
is  not  a  free  gift  of  nature  for  man  has  been  com- 
pelled to  use  his  brain  and  hands  in  assisting  nature  in 
order  to  make  modern  civilization  possible.  Capital 
is  an  intermediate  product  in  the  process  of  obtaining 
goods  to  satisfy  human  wants.  It  varies  in  nature 
and  complexity  from  the  sharpened  stick  with  which 
the  Indian  woman  planted  corn  to  the  giant  press 
that  prints  a  modern  newspaper.  As  John  Stuart 
Mill  pointed  out,  all  capital  is  the  result  of  saving  and 
in  turn  all  capital  is  used  up,  but  it  is  never  used  for 
the  purpose  of  satisfying  human  wants  directly.  In 
so  far  as  it  does  this,  it  loses  its  character  as  capital 
and  becomes  a  consumption  good,  thus  placing  the 
article  in  the  third  category  of  social  wealth. 


THE  PEOPLE  OF  THE  UNITED  STATES    11 

Consumption  Goods  are  those  concrete  goods  at 
the  service  of  the  final  consumer  and  intended  for  use 
in  the  satisfaction  of  human  wants.  Some  consump- 
tion goods  are  free  gifts  of  nature  as  the  wild  flowers 
on  the  hillside,  the  song-birds  in  the  tree  tops,  the 
lakes,  the  mountains,  and  the  waterfalls  which  make 
the  landscape  beautiful.  Other  consumption  goods 
are  the  products  of  human  toil  cooperating  with  the 
forces  of  nature.  Our  houses  and  clothing,  books  and 
furniture,  carriages  and  automobiles,  food  and  fuel, 
all  are  the  result  of  man's  efforts  and  all  yield  directly 
an  income  of  gratifications. 

It  is  infinitely  easier  to  classify  wealth  into  logical 
categories  than  it  is  to  measure  the  amount  of  wealth 
falling  into  each  class.  Wealth  is  a  quantity  of  utility 
— of  power  to  satisfy  human  wants.  There  exists, 
however,  no  standard  unit  of  utility  which  may  be 
statistically  recorded  by  government  officials,  hence, 
we  must  adopt  an  indirect  route  and  estimate  wealth 
in  terms  of  money  value.  This,  unfortunately,  rules 
out  the  consideration  of  free  goods.  No  one  can  cal- 
culate the  relative  utility  to  the  people  of  a  nation  of 
free  as  compared  to  economic  goods.  It  is  said  that 
the  food  supply  of  some  of  the  African  tribes  consists 
almost  entirely  of  wild  fruits  growing  in  the  forest. 
To  them,  free  goods  are  doubtless  more  essential  than 
economic  goods.  Free  goods  played  an  important 
role  in  the  life  of  the  American  frontiersman.  Wild 


12    WEALTH  OF  PEOPLE  OF  UNITED  STATES 

game  and  fruit  furnished  much  of  his  sustenance. 
He  paddled  his  canoe  along  untrammelled  streams, 
hunted  in  the  primeval  unowned  forest,  and  cooked 
his  food  over  a  fire  of  free  wood.  The  city  dweller 
to-day,  on  the  contrary,  pays  for  almost  everything 
he  enjoys,  except  the  air  which  he  breathes  and  he 
has  to  pay  dearly  enough  to  live  in  a  district  in  which 
the  air  is  fairly  pure.  It  does  not,  therefore,  neces- 
sarily follow  that  because  the  economic  goods  owned 
by  the  city  dweller  of  to-day  possess  twice  the  utility 
of  the  economic  goods  owned  by  his  grandfather,  the 
frontiersman,  he  possesses  twice  the  wealth  of  his 
grandsire.  The  reverse  may  be  true.  This  fact  must 
be  kept  in  mind  when  studying  comparisons  of  the 
wealth  of  peoples  widely  separated  in  time  or  environ- 
ment. Since  no  statistical  measures  of  free  goods  are 
available,  comparisons  can  be  made  only  between 
values  of  economic  goods.  In  recent  times,  when  a 
larger  and  larger  percentage  of  social  wealth  is  becom- 
ing economic  or  scarce,  measures  of  economic  wealth 
become  better  and  better  criteria  of  the  actual  social 
wealth  of  a  community  or  nation. 


CHAPTER  III 


CHANGES  IN  THE  SOCIAL  WEALTH  OF  THE  AMERICAN 
PEOPLE 

SINCE  we  cannot  measure  the  absolute  utility  of  the 
wealth  possessed  at  different  dates  by  the  people  of 
the  United  States,  we  must  seek  for  the  best  available 
criteria  which  may  be  used  as  approximate  yard- 
sticks or  standards  of  measurement.  The  latest 
official  figures  available  give  the  following  estimates 
of  the  money  value  of  the  economic  wealth  of  the 
American  people. 

TABLE  I 


THE  MONEY  VALUE  OF  THE  ECONOMIC  GOODS  POSSESSED  BY 
THE  PEOPLE  OF  THE  CONTINENTAL  UNITED  STATES.1 

Year. 

Total  Amount. 

Amount  per  Capita. 

1850 
1860 
1870 
1880 
1890 
1900 
1904 

$    7,135,780,000 
16,159,616,000 
30,068,518,000 
43,642,000,000 
65,037,091,000 
88,517,307,000 
107,104,212,000 

$   307.69 
513.93 
779.83 
870.20 
1,035.57 
1,164.79 
1,318.11 

These  figures  indicate  a  tremendous  growth  in  the 
possessions  of  the  people,  even  when  considered  from 
the  per  capita  standpoint.  Before  we  can  arrive, 

1  Statistical  Abstract  of  the  United  States  far  1913,  p.  628; 
excludes  Alaska  and  the  island  possessions. 

13 


14  WEALTH  AND  INCOME  OF 

however,  at  any  definite  conclusion  we  must  consider 
the  estimates  critically.  It  is,  of  course,  understood 
that  the  figures  are  more  or  less  inaccurate,  but  any 
probable  percentage  of  error  is  almost  sure  to  be  negli- 
gible in  so  far  as  accounting  for  the  tremendous  and 
steady  increase  appearing  in  the  recorded  amounts. 
Since,  however,  wealth  is  measured  in  utility  and 
these  figures  are  given  in  terms  of  value,  we  must, 
to  the  best  of  our  ability,  eliminate  changes  due  to 
fluctuations  in  the  purchasing  power  of  the  medium 
of  exchange.  We  may,  perhaps,  be  safe  in  assuming 
that  the  utility  of  a  bushel  of  wheat  or  a  yard  of 
sheeting  is  approximately  the  same  to-day  as  it  was 
fifty  years  ago.  By  following  the  same  line  of 
reasoning,  if  we  were  to  divide  the  wealth  at  a  given 
date  by  an  index1  of  the  general  level  of  prices,  we 
should  obtain  a  rough  composite  measure,  in  terms 
of  weight  or  bulk  or  area,  of  the  economic  goods  in 
existence  at  each  date.  This  might,  on  the  whole, 
answer  fairly  well  as  an  indicator  of  the  economic 
wealth  at  the  different  census  years.  One  difficulty, 
however,  immediately  confronts  us.  A  large  part  of 

1  For  the  information  of  those  not  versed  in  statistical  science, 
it  may  be  said  that  index  numbers  are  used  to  compare  numerical 
amounts  as  to  their  relative  size.  The  basic  quantity,  to  which  all 
other  quantities  are  compared,  is,  ordinarily,  represented  by  100. 
Thus,  if  the  price  of  wheat  in  1890  were  80  cents  and  if  this  price 
were  taken  as  a  base,  or  100,  then,  in  1896,  when  the  price  of 
wheat  fell  to  60  cents,  the  index  number  would  be  75.  If,  in 
1910,  the  price  rose  to  $1.20,  the  index  number  would  be  150. 


THE  PEOPLE  OF  THE  UNITED  STATES    15 

this  increase  in  wealth  is  represented  by  rising  land 
values  and  we  have  no  index  of  prices  including  land 
in  the  list  of  commodities  used  in  computing  the  index. 
We  must,  therefore,  study  the  land  supply  separately. 

THE  LAND  SUPPLY 

The  land  supply  may  be  considered  either  from  the 
narrow  point  of  view  of  the  owner  of  the  land  or  from 
the  broader  point  of  view  of  the  people  of  the  nation 
as  a  whole.  It  is  from  the  productive  resources 
given  us  by  nature  that  we  must  all  derive  our  suste- 
nance— it  is  on  the  land  that  we  must  all  find  homes. 
In  this  study,  therefore,  we  shall  take  the  broader  or 
social  standpoint. 

The  land  of  the  rural  regions  furnishes  us  with 
foodstuffs  and  raw  materials.  In  the  cities,  land  is 
principally  valuable  because  of  mere  area — its  power 
of  supplying  space  for  playgrounds,  streets,  homes, 
factories,  stores,  and  office  buildings.  In  the  first 
instance,  the  quality  of  the  land  is  of  prime  impor- 
tance. In  the  second  case,  quantity  and  location  are 
the  principal  requisites.  We  shall  first  discuss  the 
changes  in  the  supply  of  the  latter  variety — the  urban 
land  of  the  United  States. 

URBAN  LAND 

Agricultural  land  is  doubtless  one  of  the  most 
essential  of  all  the  gifts  which  nature  has  bestowed 


16 


WEALTH  AND  INCOME  OF 


upon  the  American  people,  but,  while  we  must  all 
eat,  and,  in  order  to  eat,  must  depend  on  the  products 
of  farm  land  in  the  United  States  or  elsewhere,  we 
must  also  all  have  a  place  of  abode.  Most  of  us 

TABLE  II 


THE  ESTIMATED  RURAL  AND   URBAN   POPULATION   OF  THE 

UNITED  STATES 

(Exclusive  of  Outlying  Possessions8). 

01 

POPULATION  IN  THOUSANDS. 

PEBCENTAOE  OF 

M 

Sg 

POPULATION. 

21 
(H 

3 

^  § 
§3 

i 

Cities  and  Villages. 

B 

3 

Cities  and 
Villages. 

• 
| 

BH 

1 

*3 

»o 

2i 

£ 

1 

*   . 

So- 

^ 

8 

§5 
fc 

H 

i 

8 

Poo" 

if 

o|' 

M 

II 

p  00 

il 

00  rt 

°t 

1850 

1,449 

23,192 

9,418 

10,877 

1,504 

1,3935 

40.6 

46.9 

6.5 

6.0 

1860 

2,044 

31,443 

12,674 

13,697 

2,447 

2,6255 

40.3 

43.6 

7.8 

8.3 

1870 

2,660 

38,558 

15,430 

15,056 

4,126 

3,9466 

40.0 

39.1 

10.7 

10.2 

1880 

4,009 

50,156 

22,049 

16,789 

4,927 

6,3916 

44.0 

33.5 

9.8 

12.7 

1890 

4,565 

62,948 

24,652 

20,023 

8,575 

9.69S4 

39.2 

31.8 

13.6 

15.4 

1900 

5,737 

75,995 

29,834 

21,169 

10,784 

14,2084 

39.3 

27.8 

14.2 

18.7 

1910 

6,362 

91,972 

31,810 

24,409 

15,451 

20,3024  34.6 

26.5 

16.8 

22.1 

1  Statistical  Abstract  of  the  United  States  for  1912,  p.  770. 

*Ibid.,  p.  41. 

1  Estimated  by  assuming  that  the  average  farm  family  has 
gradually  decreased  in  number  of  persons  from  6.5  in  1850  to  5.0 
hi  1910. 

4  Abstract  of  the  Thirteenth  Censm  of  the  United  States,  p.  59. 

6  Eighth  Census  of  United  States,  pp.  242-244. 

6  Tenth  Census  of  the  United  States,  Population,  pp.  xxx-xxxi, 
447-456. 

7  Twelfth  Census  of  the  United  States,  Vol.  I,  Pt.  I,  p.  Ixxxiii. 

8  Outlying  possessions  consist  of  Alaska,  Hawaii,  the  Philip- 
pines, Porto  Rico,  the  Canal  Zone,  etc. 


THE  PEOPLE  OF  THE  UNITED  STATES    17 

to-day  live  in  cities  or  towns  or  villages  and  we  are 
just  as  much  interested  in  the  land  we  live  upon  as 
in  the  land  which  furnishes  us  with  food.  Let  us, 
then,  first  consider  the  supply  of  residential  land. 

The  farmer,  in  most  cases,  has  as  much  residential 
land  as  he  desires.  His  circumstances,  in  this 
respect,  have  probably  not  changed  materially  since 
1850.  The  same  cannot  be  said  of  the  urban  dwellers. 

It  is  the  practically  universal  belief  that  the  last 
sixty  years  has  witnessed  a  wholesale  cityward  migra- 
tion of  the  farmers  of  the  United  States.  We  have 
been  told  over  and  over  again  that  "the  high  cost  of 
living"  is  due  to  the  fact  that  the  American  farmer's 
sons  have  been  lured  away  by  the  attractions  of  the 
city,  leaving  the  rural  regions  relatively  depopulated. 
An  examination  of  Table  II,  Column  8,  however, 
shows  that  the  Census  figures  tell  a  very  different 
story.  The  chief  objection  to  the  rural  depopulation 
theory  appears  to  be  that  no  such  depopulation  has 
occurred.  While  millions  of  the  boys  and  girls  from 
the  farms  have  yielded  to  the  attractions  of  city  life, 
many  more  millions  have  remained  to  cultivate  the 
soil.  In  addition,  a  constant  stream  of  immigrants 
from  northern  and  western  Europe  has  peopled  great 
sections  of  the  farming  districts  of  the  Upper  Missis- 
sippi valley  and  the  Great  Plains.  In  1850,  40.6 
per  cent,  of  our  people  lived  on  the  farms  and,  at  the 
close  of  the  century,  39.3  per  cent,  still  remained 
3 


18 


WEALTH  AND  INCOME  OF 


there.  Only  in  the  last  decade  has  the  percentage  of 
our  population  engaged  in  farming  shown  a  marked 
decline.  Yet  the  fraction  of  the  population  living 
in  cities  has  steadily  and  rapidly  increased.  What 
is  the  explanation? 

FIGURE  1 

A  CLASSIFICATION  OP  THE  POPULATION  OF  THE  UNITED  STATES 
ACCORDING  TO  URBAN  OR  RURAL  RESIDENCE.1    1850-1910 


1850 


1660 


JB70 


JB80 


1890 


1900 


0  Otties  over  100,000 

T  Cities  8,000  to  100,000 

V  Villages  under  8,000 

A  Agricultural  .Population. 


IfllO 


A  glance  at  Fig.  1  and  the  ninth  column  of  Table  II 
answers  the  query.     Our  village  population  has  been 
1  See  Table  II. 


THE  PEOPLE  OF  THE  UNITED  STATES    19 

a  relatively  declining  factor  throughout  the  whole 
six  decades.  While  the  number  of  villagers  has  a 
little  more  than  doubled,  the  city  population  has 
been  multiplied  by  twelve.  This  does  not  necessarily 
mean  that  the  villagers  or  their  children  have  almost 
unanimously  moved  to  the  cities.  Many  have 
remained  in  their  old  homes  and  have  watched  the 
hamlet  develop  into  a  town  and  the  town  into  a 
city  and  even  the  city  into  a  metropolis.  In  addition, 
large  numbers,  probably,  of  the  enterprising  youths  of 
the  village  have  sought  fortune  or  pleasure  in  the 
neighboring  cities.  But  the  greatest  single  source  of 
city  growth  has  been  the  deluge  of  foreigners  who 
have  gone  to  some  American  city  directly  from 
Europe  and  who  have  remained  in  the  cities  in  such 
numbers  that  most  of  our  great  metropolitan  centers 
now  possess  a  majority  of  either  the  foreign  born  or 
their  children. 

It  would  require  an  exhaustive  separate  investi- 
gation to  determine  the  exact  causes  of  city  growth 
and  that  is  far  outside  the  scope  of  this  study.  The 
fact  that  stands  out  clearly  is  that,  while  our  farming 
population  has  almost  kept  pace  with  the  general 
growth  of  the  nation,  the  village  growth  has  been 
relatively  slow,  and  that  every  village  loss  in  per- 
centage of  the  total  population  of  the  country  has 
been  absorbed  by  the  cities.  As  a  result,  each 
decade  has  seen  a  larger  fraction  of  the  American 


20  WEALTH  AND  INCOME  OF 

people  living  in  a  city  environment.  The  large  city 
has  grown  even  faster  than  the  small  one.  In  1850, 
only  a  paltry  six  per  cent  of  our  people  dwelt  in  cities 
of  over  100,000  inhabitants.  To-day,  such  cities 
are  the  homes  of  nearly  one-fourth  of  all  our  popu- 
lation. How  has  this  change  affected  the  supply  of 
residential  land  per  capita? 

The  villager  is  usually  well  supplied  with  land. 
His  house  is,  ordinarily,  surrounded  by  a  lawn  and 
has  a  garden  at  the  rear.  In  the  smaller  cities  also 
this  is  likely  to  be  true,  but,  in  the  great  metropolis, 
it  is  the  rare  exception.  In  general,  therefore,  the 
larger  the  city,  the  less  of  residential  land  is  available 
for  each  family.  It  may,  then,  be  safely  said  that 
the  sixth  part  of  our  population,  those  who  live  in 
cities  of  from  8,000  to  100,000  inhabitants,  are  not 
quite  as  well  supplied  with  land  as  under  the  village 
conditions  of  the  past,  while,  for  the  nearly  one- 
fourth  of  our  people  living  in  cities  of  over  100,000, 
the  conditions  are  decidedly  worse  as  regards  avail- 
able space  for  residence.  The  increasing  crowding, 
which  makes  itself  manifest  by  increasing  rents  and 
land  values,  has  forced  far  too  large  a  fraction  of  the 
inhabitants  to  dispense  with  every  semblance  of  a 
grass  plot  or  garden  and  to  live  in  many-storied 
structures  among  the  dust  and  smoke  which  so 
universally  accompany  the  factory  and  business 
districts.  Urban  residence  land-values  have  gone 


THE  PEOPLE  OF  THE  VNITED  STATES          21 

skyward,  forcing  the  city  dwellers  into  greater  and 
greater  congestion,  in  other  words,  into  a  more  and 
more  restricted  use  of  land  for  the  average  person. 
The  rise  of  the  assessed  value  of  land  in  a  city  is, 
then,  far  from  being  a  mark  of  increased  land  supply — 
of  better  conditions  of  life  for  the  average  inhabitant. 
On  the  reverse,  rising  land  values,  in  a  city  of  over 
50,000  people,1  almost  invariably  signify  a  diminution 
of  the  benefits  of  land  to  the  average  citizen,  and, 
since  the  urban  dwellers  now  form  such  an  important 
fraction  of  the  entire  population,  a  decrease  in  the 
average  well-being  of  the  American  people  in  so  far 
as  the  supply  of  residential  land  is  concerned. 

When  it  comes  to  land  for  business  purposes,  we 
find  that  the  large  cities  have  also  a  shortage  in  this 
line,  especially  in  the  retail  and  office  districts. 
This  is  clearly  evidenced  by  the  great  skyscrapers 
erected  at  a  cost  of  so  many  millions  in  the  down- 
town section  of  every  large  city.  The  disadvantages 
of  land  shortage,  in  this  case,  are  largely  offset  by 
the  advantage  of  getting  related  businesses  close 
together  and  the  resulting  facilitation  of  large-scale 
industrial  operations.  The  crowding  of  business  into 
small  areas  may,  therefore,  be  passed  over  as  a  form 
of  land  shortage  which  is  slightly,  if  at  all,  detri- 
mental to  the  social  welfare. 

1  As  a  village  grows  into  a  city,  many  improvements  such  as 
water-pipes,  gas-mains,  paving,  etc.,  are  incorporated  into  the 
land,  thus  giving  added  utility  to  offset  the  rising  price. 


22  WEALTH  AND  INCOME  OF 

AGRICULTURAL  LAND 

In  this  connection,  it  must  again  be  emphasized 
that  we  cannot  measure  land  supply  in  terms  of 
value.  Rising  prices  of  farm  land  only  show  that 
farm  land  is  becoming  more  desirable  as  compared  to 
money.  But  land  is  something  which  grows  real 
material  crops  to  satisfy  our  hunger.  A  bushel  of 
wheat  goes  no  further  when  it  is  worth  a  dollar  than 
when  it  sells  for  fifty  cents.  In  measuring  the  bene- 
fits of  agricultural  land  we  must,  therefore,  consider 
not  its  value  but  its  area  and  fertility. 

Table  II  showed  us  that,  despite  the  general  belief 
to  the  contrary,  the  fraction  of  our  people  engaged  in 
farming  has  shown  a  remarkable  constancy,  only 
beginning  to  fall  off  materially  during  the  decade 
1900-1910.  Since  1850,  the  number  of  farmers  in 
the  United  States  has  more  than  trebled,  but  the  area 
of  the  United  States  proper  has  remained  almost 
unchanged.  How  has  our  growing  farm  population 
fared  for  land? 

Table  III  brings  out  the  fact  that,  as  far  as  land 
acreage  is  concerned,  the  farmer  is  little  worse  off 
to-day  than  in  1850.  The  amount  of  land  for  each 
farm  inhabitant  has  decreased  only  about  one-ninth 
during  this  entire  period.  The  great,  fertile  Missis- 
sippi Valley  has  been  opened  up  and  settled  and, 
until  recently,  the  Federal  government  gave  farms 
for  the  asking  to  nearly  everyone  desiring  land. 


THE  PEOPLE  OF  THE  UNITED  STATES    23 
TABLE  III 


LAND  IN  FARMS  IN  THE  UNITED  STATES 
(outlying  possessions  excluded).2 

CENSUS  YEAR. 

TOTAL  ACREAGE 

IN  FARMS.1 

ACREAGE  OF  FARM  LAND  PER  PERSON. 

For  Persons  Liv- 
ing on  Farms. 

For  All  Persons  in 
the  United  States. 

1850 
1860 
1870 
1880 
1890 
1900 
1910 

293,560,614 
407,212,538 
407,735,041 
536,081,835 
623,218,619 
838,591,774 
878,798,325 

31.17 
32.13 
26.43 
24.31 

25.28 
28.11 
27.63 

12.66 
12.95 
10.58 
10.69 
9.90 
11.03 
9.55 

But,  in  agriculture,  acreage  is  not  an  accurate 
measure  of  land  supply.  During  the  period  1850 
to  1885,  the  land  brought  into  cultivation  was,  as  a 
rule,  of  better  quality  than  that  hitherto  farmed. 
The  rich  lands  of  Illinois  and  Iowa  were  equalled  in 
fertility  by  no  large  area  in  the  East.  But,  since 
1885,  there  has  been  a  marked  change.  The  margin 
of  cultivation,  that  borderland  where  it  is  just  worth 
while  to  cultivate  the  soil,  has  come  gradually  to 
depend  not  upon  railway  facilities  or  distance  from 
market  but  upon  rainfall.  Across  the  Great  Plains, 
the  farmer  has  pushed  closer  and  closer  to  the  base 

1  See  the  Statistical  Abstract  of  the  United  States  far  1912,  p.  139, 
and  The  Abstract  of  the  Thirteenth  Census  of  the  United  States, 
p.  265.     Land  in  farms  includes  pasture  and  woodland  as  well 
as  cultivated  fields. 

2  See  Table  II. 


24  WEALTH  AND  INCOME  OF 

of  the  Rockies  and,  as  he  has  done  so,  the  difficulty 
of  producing  a  bushel  of  corn  or  wheat  has  continually 
increased.  He  has  resorted  to  irrigation  and  other 
devices  unnecessary  in  the  moist  climate  of  the 
Valley  and  these  all  require  greater  effort  in  order 
to  secure  the  same  yield.  But  the  precipitation,  and 
hence  the  water  supply,  of  the  Western  Highlands 
is  scanty  and,  as  a  result,  but  a  trivial  fraction  of 
the  semi-arid  plains  can  be  irrigated.  The  great 
bulk  of  the  farming  must  depend  for  moisture  upon 
the  rainfall  directly  provided  by  nature.  This  is, 
too  often,  light  and  irregular.  Even  with  the  most 
modern  and  approved  methods  of  "dry  farming", 
crop  yields  are  apt  to  be  small  and  crop  failures  or 
partial  failures  very  frequent.  We  should  naturally 
expect,  therefore,  to  find  the  average  quality  of  our 
farm  land  to-day  to  be  poorer  than  the  average  quality 
of  the  farm  land  of  a  quarter  century  ago.  This 
expectation  is  apparently  fulfilled  by  an  examination 
of  the  yields  per  acre  of  leading  crops.  Few  will 
deny  that,  with  the  growth  of  scientific  agriculture, 
with  the  multiplication  of  farm  journals,  agricultural 
schools,  and  experiment  stations,  our  methods  of 
farming  have  been  improved.  Plant  breeding  has 
given  us  more  productive  varieties  of  grains  and 
vegetables  and  the  farmer  has  been  taught  how  to 
grow  them.  If,  then,  the  average  quality  of  farm 
land  has  not  grown  worse,  a  greatly  increased  yield 


THE  PEOPLE  OF  THE  UNITED  STATES 


25 


per  acre  would  be  almost  certain.  Table  IV  shows 
us  the  actual  condition  of  affairs  for  the  last  forty- 
seven  years  as  reported  by  the  United  States  Depart- 
ment of  Agriculture. 

TABLE  IV 


ACRE  YIELDS  OF  LEADING  CROPS  IN  THE  UNITED  STATES 
(outlying  possessions  excluded).* 

PERIOD. 

AVERAGE  CHOP  PEK  ACHE.' 

Corn, 
Bushels. 

Wheat, 
Bushels. 

Oats, 
Bushels. 

Barley, 
Bushels. 

Cotton,  i»* 
Bales. 

1866-1875 
1876-1885 
1886-1895 
1896-1905 
1906-1912 

26.1 
25.5 
23.5 
25.2 
27.0 

11.9 
12.3 
12.6 
13.5 
14.5 

28.1 
27.6 
25.6 
29.6 
29.1 

22.9 
22.4 
22.6 
25.1 
25.0 

.348 
.383 

.405 
.394 

From  these  figures,  we  see  that,  in  every  instance, 
these  leading  crops  have  shown  an  increased  yield 
per  acre.  In  the  case  of  wheat  and  cotton,  it  is 
quite  marked;  in  the  case  of  corn,  oats,  and  barley, 
it  is  very  slight.  On  the  whole,  the  increase  appears 
to  be  less  than  we  should  have  expected  from  the  new 
methods  of  agriculture  if  applied  to  a  constant 
quality  of  land.  Apparently,  therefore,  the  average 
farm  land  of  to-day  is  not  quite  so  fertile  as  the 
average  farm  land  of  a  generation  ago,  but  improved 

1  Statistical  Abstract  of  the  United  States  for  1912,  pp.  143-145, 
158,  772. 

2  Statistical  Abstract  of  the  United  States  for  1899,  p.  372. 
8  See  Table  II. 


26  WEALTH  AND  INCOME  OF 

methods  of  farming  have  led  to  an  increased  product 
per  acre.  In  other  words,  the  rich  land  reclaimed 
from  swamps,  cleared  of  stones  and  timber,  or  brought 
under  irrigation  has  not  been  quite  sufficient  in 
quantity  to  offset  the  large  tracts  of  semi-arid  land 
recently  added  to  our  farm  area.  Since,  to-day,  the 
unoccupied  or  scantily  settled  portions  of  the  United 
States  lie  mainly  in  the  semi-arid  West,  we  must 
anticipate  in  the  future  that  the  growth  of  population 
will  cause  the  average  quality  of  our  agricultural 
lands  steadily  to  grow  poorer  and  poorer. 

Up  to  the  present  time,  however,  the  farmer  cannot 
be  said  to  have  lost,  materially,  either  in  the  area  of 
land  which  he  cultivates  or  in  its  quality.  The  bene- 
fits of  land  which  have  actually  been  lost  to  the  farmer 
seem  to  consist  principally  of  the  services  of  the 
neighboring  free  land  to  which  he  formerly  had 
unrestricted  access  though  possessing  no  title  thereto. 
The  frontier  farmer  could  hunt,  fish,  pasture  his  stock 
and  cut  timber  on  the  unoccupied  lands  near  his 
abode.  These  privileges  cost  him  nothing.  To-day 
such  opportunities  are  becoming  more  and  more 
rare.  True,  such  privileges  were  always  far  from 
universal,  but,  in  earlier  times,  they  accrued  to  a 
much  larger  share  of  our  rural  population  than  is  the 
case  to-day.  In  this  respect,  then,  the  average 
farmer  gets  less  of  the  advantages  of  land  than 
formerly. 


THE  PEOPLE  OF  THE  UNITED  STATES    27 

But,  to  consider  farm  land  as  it  affects  the  farmer 
only,  is  a  narrow  and  individualistic  point  of  view. 
The  agricultural  lands  of  a  nation  are  the  heritage  of 
the  whole  people.  From  these  lands  they  must 
largely  draw  their  supplies  of  food  and  clothing. 
The  most  pertinent  query,  therefore,  is:  "Has  the 
supply  of  farm  land  increased  as  rapidly  as  the  popu- 
lation of  the  United  States  as  a  whole?"  We  know 
that  our  population  has  grown  tremendously  while 
the  geographical  area  of  the  continental  United 
States  has  remained  about  constant,  but  much  of 
the  land  was  formerly  unoccupied  and  yielded  only  a 
small  product  of  game,  timber,  or  pasture.  Have 
we  succeeded  in  carving  out  new  farms  at  a  rate  to 
keep  pace  with  our  increasing  numbers?  A  glance 
at  the  last  column  of  Table  III  shows  that,  while  we 
have  failed  in  this  respect,  yet  we  are  a  surprisingly 
short  distance  behind  in  the  race.  Each  inhabitant 
of  the  United  States  to-day  has  more  than  three- 
fourths  as  much  farm  land  producing  for  him  as  had 
the  inhabitant  of  1850  and  the  loss  since  1870  has 
been  only  about  one  acre  per  capita.  There  has, 
however,  been  a  sharp  decline  since  1900  which 
apparently  indicates  that  the  difficulties  of  getting 
land  suitable  for  farming  are  on  the  increase  to  such 
an  extent  as  to  portend  a  serious  shortage  for  the 
future. 


28  WEALTH  AND  INCOME  OF 

GRAZING  LANDS 

But  farms  and  residence  lots  are  not  the  only  kinds 
of  land.  Not  many  years  ago,  ranches  covered  nearly 
half  of  the  area  of  the  United  States.  Throughout  the 
West,  great  herds  of  cattle  and  sheep  roamed  over 
vast  stretches  of  the  public  domain.  To-day,  the 
best  of  this  territory  has  been  occupied  by  farms  and 
the  ranchman  has  been  driven  back  to  the  more 
barren  sandhill  or  semi-desert  regions.  The  growing 
cry  for  food  has  led  the  corn  and  wheat  farmer  to 
encroach  upon  the  "cow-country" — to  undertake  a 
precarious  fight  against  drought  in  the  hope  of  wrest- 
ing from  unwilling  nature  a  few  more  bushels  of 
grain  to  satisfy  the  hunger  of  the  oncoming  millions. 
His  invasion  has  proved  a  body  blow  to  the  cattle 
and  sheep  industry  as  is  shown  by  Table  IVA. 

From  1880  to  1900,  the  number  of  cattle  in  the 
United  States  almost  doubled,  but,  during  the  decade 
1900  to  1910,  the  advent  of  the  farmer  in  the  range 
country  and  the  higher  prices  for  farm  produce 
which  led  to  the  breaking  up  of  pasture  lands  and  the 
more  extensive  feeding  of  cut  forage  and  grain  caused 
a  sharp  decrease  in  the  total  number  of  cattle  in  the 
country.  During  the  same  period,  population  greatly 
increased  so  that  the  supply  of  cattle  per  capita 
diminished  by  one-fourth.  Since  the  census  year  of 
1910,  the  reports  of  the  Agricultural  Department 
indicate  that  the  rate  of  diminution  in  the  supply  has 


THE  PEOPLE  OF  THE  UNITED  STATES 


29 


greatly  accelerated,  and  that  in  1913  there  were  almost 
one-fifth  less  cattle  in  the  United  States  than  in  1910, 
the  per  capita  decrease  being  more  than  that  amount.* 
This  fact  has  been  abundantly  evidenced  by  the 
rising  prices  of  beef  which  threaten  soon  to  eliminate 
steaks  and  roasts  from  the  diet  of  the  average 
American. 

TABLE  IVA 


THE  NUMBER  OF  CATTLE  AND  SHEEP  ON  FARMS  AND  RANGES 
IN  THE  UNITED  STATES 
(outlying  possessions  excluded). 

CENSUS 
YKAB. 

CATTLE. 

SHEEP.* 

Total  Number. 

Number 
per  Person. 

Total  Number. 

Number 
per  Person. 

1880 
1890 
1900 
1910 
1913 

39,675,03s1 
57,215,2122 
67,719,4103 
61,803,8663 
50,572,000s 

.791 
.909 
.891 
.672 
.521 

42,000,000! 
40,876,3  122 
61,503,7133 
52,447,8613 
47,193,000 

.84 
.649 
.809 
.570 
.486 

Sheep  have  shown  a  similar  tendency  with  even 
more  striking  results.  Despite  the  until  recently 
continued  presence  of  high  protective  duties  on  wool, 

*  Statistical  Abstract  of  the  United  States  for  1918,  p.  770. 

1  Tenth  Census  of  the  United  States,  Vol.  Ill,  p.  141. 

2  Eleventh  Census  of  the  United  States,  Statistics  of  Agriculture, 
p.  29. 

3  Abstract  of  the  Thirteenth  Census  of  the  United  States,  p.  311. 

4  Excludes  most  of  spring  lambs. 

'Estimated  from  reports  of  United  States  Department  of 
Agriculture. 


30 


WEALTH  AND  INCOME  OF 


FIGURE  2 

NUMBER  OF  CATTLE  AND  SHEEP  ON  THE  FARMS  AND  RANGES  IN 
THE  UNITED  STATES,  PER  INHABITANT1 

LOO 


.90 


,80 


J70 


Cattle 
1  Sheep 


1880 


1890 


1900 
Census  Year 


1910 


1920 


Note:  Only  years  1880, 1890, 1900, 1910,  and  1913  significant- 
straight  lines  between  these  points. 

the   sheep-grower   has   been   unable,    on   the   fertile 
Eastern  lands,  to  compete  with  the  grain  farmer  and 
the  encroachment  on  his  pasture  land  has  gradually 
1  See  Table  IV. 


THE  PEOPLE  OF  THE  UNITED  STATES    31 

forced  him  out  of  business.  The  decade  1900  to 
1910  showed  a  falling  off  of  over  one-fourth  in  the 
per  capita  supply  of  sheep  and  the  later  figures  of 
the  Department  of  Agriculture  show  that  in  1913  the 
movement  was  still  going  on  at  a  similar  rate.1 

Thus,  we  perceive  that  the  apparently  satisfactory 
manner  in  which  the  area  of  our  farm  lands  has 
kept  pace  with  our  population  has  not  been  quite  so 
much  a  cause  for  self-congratulation  as  it  at  first 
appeared.  Grain-farming  has  grown  at  the  expense 
of  grazing  and  the  increase  of  our  supply  of  agricul- 
tural land  has  been  at  the  expense  of  our  ranges. 
If  events  continue  along  the  present  trend,  we  seem 
destined  to  lose  our  proud  boast  that  the  American 
workingman  has  meat  on  his  table  three  times  a  day. 
Despite  our  vaunted  increase  in  wealth,  one  of  the 
widely-accepted  landmarks  of  prosperity  will  have 
disappeared. 

FORESTS 

Another  important  category  of  our  natural  re- 
sources consists  of  forests  and  the  lands  upon  which 
they  grow.  When  America  was  discovered,  nearly 
one-half  the  area  of  the  present  United  States  was 
covered  with  fairly  dense  forests.  At  the  present 
time,  only  about  300,000,000  acres  of  merchantable 
timber  is  left  standing,  one-third  of  this  area  belonging 

1  Statistical  Abstract  of  the  United  States  for  1913,  p.  771. 


32  WEALTH  AND  INCOME  OF 

to  the  National  Government.1  The  total  forest  area 
comprises  less  than  one-sixth  of  the  country  as  a 
whole.  Thus,  nearty  two-thirds  of  the  original 
forests  have  been  cleared  off  and  it  seems  true,  beyond 
question,  that  this  includes  decidedly  the  best  two- 
thirds  of  the  timber.  It  is  not,  however,  fair  to 
assume  that  the  timber  removed  represents  a  net 
loss  in  the  natural  resources  of  the  country.  A  large 
part  of  the  cleared  land  is  more  valuable  with  the 
trees  off  than  in  its  original  state — that  is,  it  is  better 
suited  to  agriculture  than  to  forestry.  We  cannot 
have  both  on  the  same  land  and  we  have  chosen  the 
farm.  At  the  present  time,  however,  the  larger 
part  of  the  land  which  is  being  cut  over  is  not  well 
adapted  to  agriculture.  When  this  is  true,  every 
acre  denuded  represents  a  net  decrease  in  the  wealth 
of  the  nation.  It  is  safe  to  say  that,  during  the  last 
score  of  years,  the  land  cleared  has  had  its  utility 
diminished  by  the  removal  of  the  trees.  Hence,  as 
regards  timber,  our  national  wealth,  as  represented 
by  natural  resources,  is  rapidly  on  the  decline,  so 
rapidly  in  fact  that  it  is  commonly  asserted  that  two- 
thirds  of  our  best  existing  forests  will  have  disap- 
peared during  the  next  two  decades,  those  remaining 
being  principally  the  wood  lots  of  the  farmers  and 
the  national  forests  protected  by  the  United  States 

1  Van  Hise,  Charles  R.,  Conservation  of  Natural  Resources  in 
the  United  States,  p.  210,  and  the  Report  of  the  Commissioner  of 
Corporations  on  The  Lumber  Industry,  Part  I,  Standing  Timber. 


THE  PEOPLE  OF  THE  UNITED  STATES    33 

Government.  It  is  worth  mentioning  in  this  con- 
nection that  certain  railroad  companies  are  now 
engaged  in  replanting  large  areas  of  cut-over  lands  in 
the  hope  of  providing  for  a  future  supply  of  ties  and 
stringers.  This  work,  while  as  yet  on  a  small  scale, 
bids  fair,  in  some  slight  degree,  to  offset  the  diminution 
in  the  social  wealth  of  the  nation  due  to  forest  removal. 

MINERAL  RESOURCES 

It  is  a  commonplace  that  the  United  States  has 
been  endowed  with  great  mineral  resources  and 
that  these  gifts  of  nature  have  been  rapidly  "de- 
veloped" or  "exploited."  Useful  minerals  are  the 
product  of  long  ages  of  geologic  activity  and,  in  the 
historical  life  of  the  nation,  the  amount  of  deposits 
formed  has  been  negligible.  When  we  rapidly 
"develop"  our  mines  or  oil  wells,  we  are  in  the  posi- 
tion of  the  spendthrift  who  inherits  a  fortune  with 
the  provision  that  it  is  to  be  paid  to  him  in  annual 
installments,  but  who,  by  some  hook  or  crook,  ar- 
ranges to  double  the  size  of  each  installment.  As  a 
result,  he  lives,  at  present,  in  great  affluence,  but, 
when  his  estate  is  once  squandered,  he  will  be  in 
poverty.  Likewise,  it  is  true  of  our  mining  operations 
that  every  ton  of  coal,  every  barrel  of  oil  removed 
from  the  earth  means  an  irremediable  loss  to  our 
national  estate.  Each  year,  our  social  wealth,  as 
represented  by  minerals,  grows  less  and  less  and  the 
4 


34 


WEALTH  AND  INCOME  OF 


more  flourishing  the  condition  of  our  mining  industry, 
the  more  rapid  the  disappearance  of  our  mineral 
estate. 

Coal  is  our  most  important  mineral  asset — the 
motive  force  of  modern  civilization.  The  amount  in 
the  ground  in  1908  was  estimated  by  the  National 
Conservation  Commission  to  be  3,135,708  million 
short  tons.1  The  tremendous  advance  in  exploitation 
during  each  decade  is  shown  in  Column  2  of  Table  V. 

TABLE  V 


PRODUCTION  OF  IMPORTANT  MINERALS  IN  THE  CONTINENTAL 

UNITED  STATES.* 

Coal  in 

Pig  Iron 

Copper 

Phosphate 

Natural 

Mil- 

in Thou- 

in Thou- 

Rock in 

Petroleum 

Gas  in 

Year. 

lions  of 

sands  of 

sands  of 

Thousands 

in  Millions 

Millions 

Long 

Long 

Long 

of  Long 

of  Gallons. 

of  Dollars' 

Tons. 

Tons. 

Tons. 

Tons. 

Worth. 

1850 

6 

564 

0.7 

— 

— 

— 

1860 

13 

821 

7 

— 

21 

— 

1870 

29 

1,665 

13 

— 

221 

— 

1880 

64 

3,835 

27 

211 

1,104 

— 

1890 

141 

9,203 

116 

510 

1,925 

19 

1900 

241 

13,789 

271 

1,491 

2,672 

24 

1910 

448 

27,304 

482 

2,655 

8,801 

71 

1912 

477 

29,727 

558 

2,973 

9,329 

— 

At  the  present  rate  of  increase  in  mining,  the  stock 
of  coal  on  hand  would  last  only  about  a  century  and 
a  half,  but  it  is  highly  improbable  that  this  present 
rate  of  increase  will  continue.  At  the  present  rate 
of  mining,  it  would  supply  us  for  nearly  seven  thou- 

1  Statistical  Abstract  of  the  United  States  for  1912,  p.  34. 

2  Statistical  Abstract  of  the  United  States  for  1913,  pp.  773-775. 


THE  PEOPLE  OF  THE  UNITED  STATES    35 

sand  years.  The  actual  time  during  which  we  can 
obtain  coal,  therefore,  can  only  be  guessed  at,  but  it 
will  probably  be  several  centuries.  The  fact  must 
not,  however,  be  overlooked  that  we  are  now  taking 
out  the  coal  of  first  quality  which  is  easy  to  reach. 
Much  of  the  stock  in  the  ground  is  of  extremely  poor 
grade  or  very  difficult  to  mine.  As  a  result,  our 
social  wealth  in  coal  is  diminishing  much  more 
rapidly  than  would  be  indicated  by  the  actual  number 
of  tons  mined  as  compared  to  the  total  supply.  This 
same  statement  would  apply  with  equal  force  to 
practically  all  of  our  other  mineral  resources. 

The  metals,  unlike  coal,  do  not  entirely  perish  in 
the  using  but,  to  a  large  extent,  are  transformed  from 
natural  resources  into  capital  goods,  still  being 
included  as  a  part  of  our  social  wealth.  Of  course, 
large  quantities  are  lost  through  oxidation  and  wear. 
In  painting  and  gilding  alone,  huge  amounts  of  lead 
and  gold  are  placed  in  a  form  from  which  their  re- 
collection as  a  mass  of  metal  is  impracticable.  Never- 
theless, the  annual  loss  in  our  inventory  of  metallic 
ores  is  partially  offset  by  an  increase  in  the  stock  of 
refined  metals  on  hand. 

As  estimated  for  the  year  1912  by  the  National 
Conservation  Commission,  the  total  supply  of  iron 
ore  of  a  quality  profitable  to  mine  was  4,784,930,000 
long  tons.1  Of  this,  we  are  mining  from  forty  to 

1  Statistical  Abstract  of  the  United  States  for  1912,  p.  35. 


36  WEALTH  AND  INCOME  OF 

sixty  million  tons  a  year.  At  the  present  rate  of 
mining,  this  would  last  about  a  century  but  Table  V 
shows  that  there  has  been  an  extremely  rapid  increase 
in  the  rate  of  extraction.  Since  1907,  however,  this 
tendency  has  been  less  marked  and  the  better  grades 
of  iron  ore  may,  therefore,  actually  last  for  fifty  to 
seventy  years  yet.  Then,  the  rich  deposits  will  be 
gone  and  we  must  turn  to  the  necessarily  more 
expensive  and  laborious  methods  of  getting  iron  from 
low  grade  ores.  Fortunately,  these  ores  exist  in  large 
quantities  else  the  Age  of  Steel  would  seem  hastening 
to  an  untimely  close.  The  Conservation  Com- 
mission estimates  indicate  the  existence  of  some 
75,000,000,000  long  tons  of  ore  not  now  worth  work- 
ing.1 This  should  supply  our  needs  for  several 
centuries  yet,  but  the  cost  of  obtaining  a  ton  of  iron 
from  this  ore  will  probably  be  several  times  the  cost 
of  mining  and  extraction  at  the  present  time  when 
high  grade  ores  are  scooped  up  with  steam  shovels 
from  great  beds  almost  on  the  surface. 

With  the  growing  use  of  electric  current  for  light 
and  power,  copper  is  becoming  more  and  more  essen- 
tial to  modern  industry.  As  shown  in  Table  V,  the 
output  has  increased  until,  in  1912,  it  was  nearly 
eight  hundred  times  as  great  as  in  1850  and  there  is 
every  indication  that  this  increase  is  to  continue  at  a 
rapid  rate  for  many  years  to  come.  No  estimates 

1  Statistical  Abstract  of  the  United  States  for  1912,  p.  35. 


THE  PEOPLE  OF  THE  UNITED  STATES    37 

are  available  as  to  the  total  supply  of  copper  ore 
but  the  consensus  of  opinion  seems  to  be  that  it  is 
very  large  but  mostly  of  a  low  grade  and  hence  that 
the  cost  of  mining  and  refining  is  destined  to  advance 
rather  rapidly.1 

Phosphate  rock  is  a  deposit  of  which  the  average 
citizen  knows  little  but  which,  nevertheless,  occupies 
a  place  of  prime  importance  amongst  our  mineral 
resources.  While  phosphates  are  absolutely  essential 
to  the  growth  of  grains,  the  supply  of  phosphorus 
in  the  soil  is  distinctly  limited  and  is  decreased  by 
every  grain  crop  grown.  If,  then,  the  fertility  of  the 
soil  and  present  grain  yields  are  to  be  maintained,  the 
phosphorus  must  be  replaced  and  this  replacement 
must  largely  come  from  the  deposits  of  calcium  phos- 
phate found  in  various  sections  of  the  country.  The 
total  store  of  rather  high  grade  phosphate  rock  in  the 
United  States  is  estimated  at  about  half  a  billion  long 
tons.2  At  the  rate  of  mining  indicated  by  Table  V 
for  1912,  the  supply  will  only  last  for  a  little  over  a 
century  and  a  half  and  the  rate  of  extraction  is  rising 
very  rapidly.  Fortunately,  there  are  large  deposits 
of  low  grade  rock  which  may  be  utilized,  but  at  a 
higher  cost  per  ton  of  phosphoric  oxide  obtained. 

In  the  sixties,  a  new  fuel  in  the  shape  of  petroleum 

1  Van  Hise,  Charles  R.,  The  Conservation  of  Natural  Resources, 
pp.  74-79. 

2  Van  Hise,  Charles  R.,  The  Conservation  of  Natural  Resources, 
pp.  320-334. 


38  WEALTH  AND  INCOME  OF 

was  discovered  and,  since  that  date,  its  production 
has  increased  by  leaps  and  bounds.  It  is  estimated 
that  some  13,000,000,000  barrels  of  42  gallons  each 
are  still  to  be  pumped  from  the  ground.1  Over 
200,000,000  barrels  were  drawn  from  the  earth  in 
1912.  Unless  geologists  are  greatly  mistaken,  pro- 
duction will  become  much  more  difficult  in  the  near 
future  and  rising  prices  will  lessen  the  demands. 
At  the  present  rate  of  use,  some  sixty  years  would 
probably  see  the  supply  in  the  United  States  ex- 
hausted. This  is  illustrated  by  the  fact  that,  in  the 
Appalachian  field,  the  daily  production  per  well  has 
fallen  from  207  barrels  in  the  early  days  to  less  than 
two  barrels  at  the  present  time.2  At  best,  this 
variety  of  our  natural  resources  is  being  depleted  with 
great  rapidity  and  seems  destined,  ere  many  decades, 
to  practically  disappear.  Yet,  despite  countless 
warnings,  we  still  recklessly  squander  this  priceless 
heritage  for  uses  in  which  a  barrel  possesses  but  rela- 
tively slight  utility.  We  construct  great  locomotives 
and  ships,  to  burn  it  in  ever  increasing  quantities 
even  though  its  superiority  over  coal  is  but  slight 
and  the  fraction  of  its  total  energy  utilized  is  but  triv- 
ial; we  even  sprinkle  it  over  our  streets  and  high- 
ways, all  regardless  of  the  fact  that,  in  so  doing,  we 

1  Van  Hise,  Charles  R.,  The  Conservation  of  Natural  Resources, 
p.  47. 

2  Van  Hise,  Charles  R.,  The  Conservation  of  Natural  Resources, 
p.  48. 


THE  PEOPLE  OF  THE  UNITED  STATES    39 

are  dissipating  the  material  needed  to  light  the 
lamps  of  the  poor  and  propel  the  aeroplanes  of  the 
rich  only  a  generation  or  two  hence. 

What  has  just  been  said  of  petroleum  has  still 
greater  force  when  applied  to  natural  gas.  According 
to  the  best  estimates,1  most  of  the  gas  fields  worth 
while  will  have  been  exhausted  in  the  next  score  of 
years  and  the  use  of  natural  gas  in  large  quantities 
will  become  historical  except  in  the  occasional  in- 
stances of  new  discoveries.  Dr.  Day  also  estimates 
that  half  of  the  gas  drawn  from  the  earth  has  been 
wasted  or  served  but  trivial  uses.  This  valuable 
kind  of  natural  wealth,  then,  must,  likewise,  soon  be 
dropped  from  our  inventory. 

The  minerals  cited  are  typical  of  mineral  resources 
in  general.  In  every  case,  the  extraction  is  becoming 
more  and  more  rapid  and  the  existing  stock  less  and 
less  abundant.  Some  of  these  minerals  will  last  for 
decades,  others  for  many  centuries,  but  this  does  not 
alter  the  fact  that,  with  the  diminishing  supply, 
they  will  all  become  harder  and  harder  to  obtain. 
Population  grows  apace,  and  hence,  the  per  capita 
stock  diminishes  much  more  rapidly  than  does  the 
total  supply,  but  this  abstract  truth  will  not,  in 
most  cases,  be  vividly  realized  by  the  next  few 
generations.  The  fact  that  will  come  home  to  them 
will  be  that  a  day's  labor  will  tend  gradually  to 

1  Day,  David  T.,  Natural  Gas  Resources  of  the  United  States, 
Volume  III,  pp.  465-475. 


40  WEALTH  AND  INCOME  OF 

procure  less  coal,  less  iron-ware,  less  copper  wire, 
and  less  gasoline  than  was  formerly  the  case.  For 
this  fact,  many  reasons  will  be  ascribed  besides  the 
true  one  of  the  using  up  of  our  natural  wealth.  Mon- 
opolies will  be  denounced  and  regulated;  the  party 
in  power  will  be  turned  out  of  office  in  disgrace;  but 
the  minerals  will  still  rise  in  value  The  rising  cost 
will  be  delayed  by  new  discoveries,  which  will  make 
mining  easier  and  transportation  and  refining  less 
difficult,  but  the  more  rapid  looting  of  Nature's 
storehouses,  made  possible  by  these  new  processes, 
will  only  accentuate  the  steepness  of  the  rising  cost 
curve  at  a  later  date,  decades  or  centuries  hence. 

SUMMARY 

The  whole  question  of  land  supply  may  be  summed 
up  as  follows:  Is  the  average  American  of  to-day  as 
richly  endowed  with  the  gifts  of  nature  as  was  the 
average  American  of  a  century  ago?  To  this  ques- 
tion, the  reply  must  be  an  emphatic  "No!"  The 
city  man  has  more  crowded  residence  quarters;  our 
supply  of  farm  land  has  not  quite  kept  pace  with 
our  population;  our  ranges  have  diminished  greatly 
in  absolute  area,  and,  to  a  much  greater  extent,  when 
considered  relatively  to  population;  our  hunting 
grounds  have  all  but  disappeared;1  our  forest  area 

1  Something  has  already  been  done  and  much  more  may  be 
accomplished  in  the  way  of  game-protection — especially  in  con- 
nection with  the  State  and  National  forest  reserves. 


THE  PEOPLE  OF  THE  UNITED  STATES    41 

per  capita  has  become  insignificant  as  compared  to 
that  possessed  by  the  Americans  of  a  century  since; 
and  our  mineral  resources  are  diminishing  steadily 
and  surely.  But  social  wealth  consists  not  of  land 
only  but  also  of  capital  and  consumers'  goods.  We 
shall  next  consider  the  supply  of  capital  on  hand  at 
the  various  census  years  since  1850. 

THE  SUPPLY  OF  CAPITAL 

Production  ordinarily  requires  the  co-operation  of 
three  forces,  labor,  capital,  and  productive  natural 
resources.  We  have  seen  that  each  person,  on  the 
average,  is,  as  time  passes,  becoming  more  and  more 
poorly  equipped  with  natural  resources.  If,  how- 
ever, he  has  better  tools  and  machines,  better  means 
of  transportation,  better  means  of  generating  power, 
in  other  words  more  capital,  he  may  still,  even  with 
poorer  natural  resources,  gain  a  larger  income.  It  is 
necessary,  therefore,  to  see  whether  an  increase  in 
the  capital  supply  per  man  has  tended  to  offset  the 
growing  scarcity  of  the  gifts  of  nature. 

Unfortunately,  the  statistics  of  value  of  capital 
goods  at  the  various  census  years  are  neither  complete 
nor  comparable.  The  term  capital  has  been  used  to 
cover  such  things  as  amount  invested,  value  of  securi- 
ties outstanding,  value  of  land,  and  value  of  those 
objects  known  to  the  economist  as  social  capital. 
Social  capital,  in  the  strict  sense,  includes  only  prod- 
ucts of  past  industry  and  only  such  of  those  products 


42  WEALTH  AND  INCOME  OF 

as  are  used  in  the  further  production  of  wealth.  Since 
we  are,  at  this  point,  inquiring  into  the  equipment  of 
society,  we  shall  attempt  to  separate  out  and  consider 
only  the  active  part  of  social  capital,  the  machines, 
buildings,  tools,  railroads,  trains,  vessels,  live  stock, 
etc.,  which  assist  in  the  creation  of  new  wealth — and 
omit  those  passive  objects  such  as  stocks  of  goods  on 
the  merchants'  shelves,  manufactured  articles  ready 
for  distribution,  grain  on  hand,  etc.,  since  these  are 
transitory  in  their  nature  and  have  relatively  little 
significance  in  showing  the  comparative  degree  to 
which  man  has  equipped  himself  to  overcome  the 
difficulties  of  extracting  a  living  from  the  earth. 

In  Table  VI,  we  have  an  attempt  to  collect  the 
various  figures  of  the  United  States  Census  and 
combine  them  into  a  harmonious  whole.  While 
the  numbers  are,  in  no  case,  exact,  it  is  believed  that 
the  errors  are  too  small  to  vitiate  any  of  the  following 
conclusions.  We  see  that  the  total  supply  of  active 
capital  has  enormously  increased,  in  fact  that,  in 
1910,  the  value  was  about  seventeen  times  as  great 
as  in  1850.  In  this  great  increase,  all  industries  have 
participated  but  the  fishing  equipment  has  grown 
most  slowly  and  the  transportation  facilities  fastest 
of  all.  At  no  census  year,  has  there  been  a  recession 
in  a  single  industry — development  has  been  con- 
tinuous in  all  lines. 

But  an  increase  in  the  total  value  of  active  capital 


THE  PEOPLE  OF  THE  UNITED  STATES 


is  not,  in  itself,  significant.     It  must  be  compared 
with  the  increase  in  population  and  with  a  changing 

TABLE  VI 


THE  ESTIMATED  VALUE  OP  THE  SUPPLY  OF  ACTIVE  CAPITAL 

IN  THE  CONTINENTAL  UNITED  STATES  IN  MILLIONS  OF 

DOLLARS. 

Business 

Movable 

Census 
Year. 

Total.6 

Buildings 
and  Fixed 
Improve- 
ments.1 

Railroads 
and  Other 
Public 
Utilities." 

Machinery, 
Tools,  and 
Imple- 
ments.* 

Live 
Stock.8 

Fish- 
eries.* 

1850 

2,757 

1,113 

639 

399 

599 

7 

1860 

5,900 

2,160 

1,868 

665 

1,198 

9 

1870 

8,978 

2,975 

3,109 

1,206 

1,678 

10 

1880 

13,636 

4,117 

5,386 

2,373 

1,735 

25 

1890 

19,298 

5,700 

8,366 

2,665 

2,538 

29 

1900 

24,783 

7,250 

10,926 

4,006 

3,197 

34 

1910 

47,961 

13,301 

23,319 

5,995 

5,296 

50 

price-level  before  we  can  arrive  at  any  conclusions 
concerning  the  influence  of  the  change  upon  the  social 
welfare.  The  third  column  in  Table  VII  indicates 
that  the  per  capita  value  of  active  capital  has  steadily 
grown  larger  until,  in  1910,  it  has  become  more  than 
four  times  as  great  as  in  1850.  Only  in  the  Civil 
War  period  has  this  apparent  increase  been  due 
wholly  to  changing  prices  for,  if  the  per  capita  value 

1  See  Table  Via,  Appendix. 
z  See  Table  VIb,  Appendix. 
8  Estimated  from  United  States  Census  figures. 
4  See  Table  Vic,  Appendix. 

B  Error  probably  not  greater  than  25  per  cent.     Figures  for 
1900  and  1910  more  accurate  than  the  others. 


44 


WEALTH  AND  INCOME  OF 


is  divided  by  the  price  index,  we  obtain  an  index  of 
amount  which  climbs  upward  until  the  quantity  per 
capita  existing  in  1850  is  more  than  quadrupled. 

TABLE  VII 


QUANTITY  OP  ACTIVE  CAPITAL  IN  THE  UNITED  STATES 
(outlying  possessions  excluded). 

Census 
Year. 

Total  Value  of  the 
Active  Capital 
Supply  in  Millions 
of  Dollars.1 

Per  Capita 
Value  of 
Active  Capital. 

V 

Price 
Index.2 

P 

Index  of 
Quantity  of 
Capital 
Per  Capita. 

V 

F 

1850 
1860 
1870 
1880 
1890 
1900 
1910 

2,757 

5,900 
8,978 
13,636 
19,298 
24,783 
47,961 

$119 
188 
233 
272 
307 
326 
521 

139.2 
141.3 
221.6 
132.4 
113.6 
101.7 
126.5 

85 
133 
105 
205 
270 
321 
412 

The  only  backward  step  shown  is  in  the  decade  1860 
to  1870  and  this  was  due,  probably,  to  the  wholesale 
destruction  of  capital  by  the  Civil  War,  a  blow  from 
which  the  Southern  States  had  only  begun  to  recover 
in  1870.  The  more  or  less  chaotic  conditions  of  the 
South  in  1870  may  also  have  resulted  in  some  in- 
completeness in  the  Census  returns. 

The  term,  "amount  of  active  capital  per  capita," 
may  need  some  explanation.     In  this  case,  we  evi- 

1  See  Table  VI. 

2  Wholesale  prices — United  States  Bureau  of  Labor  index; 
Base  1890-1899;  for  year  preceding  the  Census  in  each  case. 
Bulletin  114,  United  States  Bureau  of  Labor  Statistics,  p.  149. 


PEOPLE  OF  THE  UNITED  STATES 


45 


dently  are  not  measuring  capital  in  units  of  weight 
or  volume.  In  every  practical  sense,  the  amount  of 
capital  is  increased  when  a  ton  of  iron  ore  and  two 

FIGURE  3 

QUANTITY  AND  MONET  VALUE  PEK  CAPITA  OF  ACTIVE  CAPITAL 
AND  CONSUMPTION  GOODS  IN  THE  UNITED  STATES1 


idex  of  Quantity 

lot 

LEGEND. 
re  Capital          > 
sumption  Goods  \ 
ve  Capital           i 
sumption.  Goods  I 

Mt'ity 
ne 

/ 

=  »  g  g  S; 

s  Value  lnsDollara  ° 

Con 

Art 

/ 

/ 

Con 

/ 

• 

_  • 

2 

/  s 

^^ 

^ 

^^" 

,^-- 

^—  ' 

/s 

s 

^ 

^^ 

* 

^'^ 

--" 

-**" 

100 
n 

/ 

^ 

X 

s 

/ 

j^" 

^ 

e^""^ 

—     - 

X 

^* 

s 
s 

•••  •"" 



^ 

1850 


1870  1880 

Census  Year 


1880 


1300 


1910 


tons  of  coal  are  converted  into  half  a  ton  of  steel 
rails.  Amount  in  this  sense  is,  therefore,  related 
somewhat  to  the  Marxian  idea  of  units  of  labor  cost 
or,  on  the  other  hand,  to  units  of  productive  power. 
On  the  whole,  the  index  numbers  representing  either 
of  these  latter  ideas  would  probably  be  quite  similar. 
1  See  tables  VII  and  VIII. 


46  WEALTH  AND  INCOME  OF 

We  may  safely  conclude,  therefore,  that  the  equip- 
ment of  the  average  American  of  to-day  for  wresting 
the  treasures  from  the  grasp  of  Nature  is  far  superior 
to  the  equipment  possessed  by  the  men  who  fought 
the  Civil  War  and  that  tools,  machines,  and  improve- 
ments are  constantly  becoming  more  and  more  com- 
plex and  efficient.  As  natural  resources  have  become 
more  scanty,  the  means  for  collecting  and  utilizing 
them  have  constantly  improved.  Has  the  gain  in 
one  case  offset  the  loss  in  the  other?  The  amount  of 
the  product  should  partly  answer  this  question. 
This  will  be  taken  up  in  a  later  chapter. 

THE  SUPPLY  OF  CONSUMPTION  GOODS 

Most  capital  and  land  are  of  little  direct  utility  to 
human  beings.  It  is  their  products  which  are  sought 
and  prized.  The  ultimate  products  which  are  ready 
to  be  used  to  satisfy  human  wants  are  known  as 
consumption  goods.  Many  consumption  goods  are 
capable  of  only  one  use,  hence,  are  used  up  with 
relative  rapidity  while  other  articles  may  be  utilized 
by  successive  generations.  Thus,  food  and  fuel 
rapidly  disappear  while  houses  and  carriages  last  for 
a  number  of  years.  Human  happiness  depends  to  a 
very  considerable  extent  upon  the  supply  of  con- 
sumption goods  but,  in  the  case  of  the  less  durable 
goods,  the  stock  on  hand  at  a  given  time  is  of  little 
moment.  The  frontier  settler  often  lays  in  flour 


THE  PEOPLE  OF  THE  UNITED  STATES    47 

for  a  year  when  he  goes  to  mill — the  modern  city 
housewife  buys  bread  for  only  one  day  and  other 
food  in  similar  proportions,  yet  the  city  family  may 
have  a  better  food  supply  than  the  settler  on  the 
edge  of  civilization.  In  the  case  of  perishable  con- 
sumption goods,  therefore,  it  is  not  the  existing  stock 
but  the  daily  supply  that  is  of  consequence. 

When,  however,  we  deal  with  durable  consumption 
goods,  the  stock  on  hand  becomes  of  prime  importance. 
We  desire  large  and  luxurious  houses  and  motor 
cars,  many  articles  of  furniture,  a  variety  of  jewelry 
and  clothing  and,  in  order  that  each  person  may  pos- 
sess such  an  assortment  of  commodities,  society  must 
accumulate  a  large  stock  of  the  articles  in  question. 
When  we  speak  of  a  city  or  nation  being  rich  or 
opulent,  we  usually  think  of  beautiful  dwellings, 
splendid  churches  and  elaborate  public  buildings, 
all  equipped  with  elegant  furnishings.  It  is  in  these 
things  that  communities  and  individuals  take  pride — 
hence  the  stock  of  durable  consumption  goods  is,  in 
many  ways,  a  good  criterion  of  the  social  welfare. 

Unfortunately,  our  statistics  of  the  value  of  con- 
sumption goods  on  hand  at  the  various  census  periods 
are  little  more  than  rough  guesses,  yet,  crude  as  they 
are,  they  apparently  point  with  certainty  to  a  rapid 
rise  in  the  total  stock  of  this  kind  of  wealth. 

Table  VIII  indicates  that,  just  as  in  the  case  of 
active  capital,  consumption  goods  have  increased  in 


WEALTH  AND  INCOME  OF 


value  per  capita  to  some  lour  times  the  amount  on 
hand  in  1850  and,  when  the  value  is  divided  by  the 
price  index,  we  see  that  an  even  greater  increase  has 

TABLE  VIII 


THE  ESTIMATED  VALUE  AND  QUANTITY  OF  CONSUMPTION 

GOODS  IN  THE  UNITED  STATES 

(outlying  possessions  excluded). 

Census 
Year 

Total  Value 
in  Millions  of 

Value  per 
Capita.3 

Price 
Index.2 

Relative  Quantity 
of  Consumption 
Goods  per  Capita. 

Dollars.1 

V 

P 

P 

1850 

2,317 

$100 

139.2 

72 

1860 

4,197 

133 

141.3 

94 

1870 

5,968 

155 

221.6 

70 

1880 

9,645 

192 

132.4 

145 

1890 

15,239 

242 

113.6 

213 

1900 

20,824 

274 

101.7 

269 

1910 

32,976 

359 

126.5 

284 

taken  place.  The  same  backset  due  to  the  Civil 
War  is  very  marked  and,  likewise,  the  remarkable 
expansion  in  the  decade  1870  to  1880,  when  industry 
was  profiting  by  new  inventions  and  the  richest 
part  of  the  Mississippi  Valley  was  just  being  fairly 
opened  up.  Evidently,  the  popular  impression  is 

1  See  Table  Villa,  Appendix. 

1  United  States  Bureau  of  Labor  index  of  wholesale  prices;  not 
well  adapted  but  the  best  available;  Bulletin  114,  United  States 
Bureau  of  Labor  Statistics,  p.  149. 

3  Roughly  estimated — error  in  last  three  decades  perhaps  15 
per  cent,  in  earlier  decades  as  high  as  30  per  cent. 


THE  PEOPLE  OF  THE  UNITED  STATES    49 

true  that,  as  far  as  dwellings,  furnishings,  vehicles, 
clothing,  etc.,  are  concerned,  we  live  in  a  state  of 
luxury  that  our  fathers  knew  not  of.  Thus,  we  are 
at  least  partially  recompensed  and  perhaps  far  more 
than  repaid  for  the  loss  of  many  of  the  pleasures 
connected  with  the  free  use  of  field  and  forest. 


CHAPTER  IV 

THE  DISTRIBUTION  OF  WEALTH  AMONG 
FAMILIES 

WHAT  DISTRIBUTION  OF  WEALTH  is  BEST? 

IN  the  preceding  chapter,  the  fact  was  brought  out 
that  the  total  and  average  supply  of  capital  and 
consumers'  goods  available  for  the  inhabitants  of 
the  United  States  has  been  increasing  at  a  rapid  rate. 
While  this  fact  would  be  admitted  by  most  observers, 
many  writers  contend  that  the  increase  or  decrease  of 
the  per  capita  wealth  is  a  matter  of  no  particular 
significance.  They  attach  primary  importance  not 
to  totals  or  averages  but  to  questions  of  distribution. 
They  point  out  that  it  is  perfectly  possible  for  the 
average  wealth  to  show  a  large  increase  and,  at  the 
same  time,  for  the  great  mass  of  the  people  to  descend 
into  more  and  more  straitened  circumstances. 
The  average  wealth  would  be  greatly  increased  by 
the  addition  of  a  few  dozen  billionaires  to  our  popu- 
lation but  this  might  give  little  more  shelter  to  the 
homeless  or  food  to  the  hungry. 

Some  of  these  writers  go  further  than  the  placing  of 
a  merely  hypothetical  question  in  the  field  for  dis- 
cussion and  contend  that  the  past  half  century  has 

60 


THE  PEOPLE  OF  THE  UNITED  STATES         51 

been  an  era  in  which  all  gains  have  been  absorbed  by 
a  few  plutocrats  while  the  great  masses  of  the  popu- 
lation have  become  poorer  and  poorer.  Such  argu- 
ments can  only  be  verified  or  disproved  by  a  direct 
study  of  the  facts,  and  facts  of  this  nature  are  neces- 
sarily statistical.  In  the  following  pages,  the  attempt 
will  be  made  to  throw  some  degree  of  light  upon  the 
matter. 

But,  of  what  importance,  after  all,  is  the  whole 
question  of  the  distribution  of  wealth  among  families? 
Is  not  the  really  fundamental  thing  the  proper  distri- 
bution of  income?  These  two  ideas  are  too  frequently 
discussed  as  if  they  were  practically  synonomous 
and,  yet,  there  is  no  necessary  dependence  of  one 
upon  the  other. 

Imagine,  for  example,  a  state  in  which  all  the 
productive  wealth  is  the  personal  property  of  the 
sovereign.  He  holds  title  to  every  mine  and  factory; 
all  the  flocks  and  herds  are  his,  alone.  But  he  is  a 
benign  ruler  and  offers  employment  to  all  in  well 
regulated  factories  or  mines,  splendidly  equipped 
public  utilities,  or  on  model  farms.  Further,  these 
industries  are  so  productive  that  he  can  and  does  pay 
good  wages  and  salaries.  His  administration  shows 
no  favoritism  but  deals  with  each  according  to  his 
merits.  In  times  of  sickness,  death  or  disaster,  he 
relieves  the  wants  of  the  unfortunate  and  ministers 
to  their  needs.  No  other  nation  can  compare  with 


62  WEALTH  AND  INCOME  OF 

his  dominions  in  general  prosperity;  no  other  people 
are  so  happy  and  contented;  and,  yet,  no  one  but  the 
king  owns  an  acre  of  land  or  a  dollar's  worth  of 
capital.  All  the  productive  wealth  of  the  nation  is 
concentrated  in  his  hands.  Nevertheless,  the  distri- 
bution of  income  has  been  reduced  to  an  ideal  basis. 
Under  such  circumstances,  a  demand  that  the  people 
own  the  wealth  of  the  land  would  appear  to  be  sheer 
folly — an  evidence  of  the  chronic  dissatisfaction  of 
some  unbalanced  agitator  or  blatant  demagogue. 

This  picture  would  have  seemed  less  impossible  to 
idealists  of  the  eighteenth  century  than  to  Americans 
of  to-day  but  does  it  differ  so  much,  after  all,  from  the 
ideal  state,  pictured  by  some  Socialist  writers  of 
recent  years?  True,  they  would  substitute  a  benefi- 
cent democratic  government  for  the  benign  monarch; 
but  the  income  is  dispensed  with  the  same  unerring 
wisdom  and  fairness;  and,  likewise,  the  result  portrayed 
is  universal  prosperity  and  happiness. 

But  we  need  not  dream  either  of  the  monarch  who 
is  all- wise  and  ever- just  or  of  the  same  perfection 
embodied  in  a  socialistic  regime  in  order  to  conceive 
of  a  state  with  a  system  of  wealth  distribution  pos- 
sessing many  of  the  characteristics  of  that  existing 
under  the  conditions  cited  above.  We  need  only  to 
imagine  the  fortunes  of  some  of  the  great  magnates 
of  the  present  day  to  go  on  increasing  for  another 
century  at  the  same  rate  as  during  the  last  thirty 


THE  PEOPLE  OF  THE  UNITED  STATES    53 

years  to  find  the  wealth  of  the  country  all  concen- 
trated in  a  few  hands.  Suppose  that  their  heirs 
should  establish  an  oligarchy  just  as  kind  and  benevo- 
lent and  fair  as  the  government  of  the  ruler  of  the 
Utopian  kingdom.  All  the  people  might  still  be 
prosperous  and  contented  and,  yet,  they  would  hold 
title  to  no  wealth  of  consequence. 

We  perceive,  therefore,  that  equality  in  wealth 
distribution  is  no  necessary  accompaniment  of 
equality  of  income  or  of  general  well-being.  Why  is 
it,  then,  that  economists  have  laid  such  stress  on  the 
question  of  wealth  ownership?  The  answer  is  that 
the  possession  of  wealth  gives  power.  Whoever 
controls  the  property  of  a  nation  becomes  thereby 
the  virtual  ruler  thereof.  And  we  do  not  possess 
faith  enough  in  the  inherent  wisdom,  virtue,  justice, 
and  benevolence  of  those  possessing  great  wealth  to 
feel  confident  that  they  will  unselfishly  and  wisely 
use  the  power  obtained  entirely,  or  even  largely  in 
the  interests  of  the  common  weal.  Did  we  possess 
such  faith,  we  could  view  with  perfect  equanimity  the 
concentration  of  all  the  wealth  of  the  nation  in  the 
hands  of  one,  or  of  a  dozen  citizens.  Since  this  form 
of  confidence  is  strikingly  lacking,  there  is  a  strong 
demand  among  many  non-socialists  that  wealth, 
and  hence  power,  be  widely  distributed.  As  to  just 
how  wide  an  area  should  be  covered  by  this  distri- 
bution, few  will  agree.  Some  would  be  satisfied  to 


54  WEALTH  AND  INCOME  OF 

have  a  select  class  of  the  most  capable  citizens  own 
the  bulk  of  the  property — others  believe  in  a  distri- 
bution approaching  equality.  Between  these  ex- 
tremes might  be  found  an  indefinite  number  of 
gradations. 

If  we  presuppose  the  existence  of  a  legal  and 
economic  system  of  a  competitive  nature,  such  as 
that  with  which  we  are  most  familiar,  we  find  that 
there  are  four  fundamental  reasons  why  it  is  desirable 
that  wealth  should  be  in  the  hands  of  the  many 
rather  than  of  the  few.  These  may  be  enumerated 
as  follows: 

1.  Under  existing  conditions,  the  state  does  not 
guarantee  a  sufficient  degree  of  assistance  in  case  of 
misfortune  to  prevent  want  and  misery.  It  only 
steps  in  to  prevent  starvation  or  to  relieve  acute 
distress.  Under  all  ordinary  circumstances,  the 
individual  is  expected  to  help  himself  and  recourse 
to  the  state  for  aid,  generally  means  that  the  appli- 
cant feels  himself  disgraced  and  is  branded  as  a  pauper 
by  the  community.1  This  being  true,  it  becomes 

1  It  is  undoubtedly  true  that,  at  the  present  time,  by  workmen's 
compensation,  old  age  pensions,  free  medical  treatment,  etc.,  the 
state  is  tending  more  and  more  to  obviate  the  pressing  necessity 
for  wealth  accumulation  in  the  hands  of  the  poorest  class.  While 
these  measures  are  doing  much  and  probably  will  do  more  to 
alleviate  acute  distress  due  to  misfortune,  there  is  no  present 
prospect  that  governmental  aid  will,  in  the  near  future,  take  the 
place  of  family  savings  in  furnishing  real  comfort  and  security 
in  times  of  stress. 


THE  PEOPLE  OF  THE  UNITED  STATES    55 

imperative  that  every  self-respecting  citizen  provide 
for  himself  protection  against  disaster  and  the  best 
form  of  such  protection  is  accumulated  wealth.  In 
time  of  unemployment  or  sickness  or  bereavement, 
there  is  a  most  striking  dissimilarity  between  the 
circumstances  of  the  man  with  a  few  thousand 
dollars  worth  of  property  and  those  of  his  neighbor 
who  has  had  the  same  income  in  the  past  but  has 
laid  away  nothing  for  the  "rainy  day."  One  is 
ready,  when  the  shock  is  over,  to  take  his  accustomed 
place  again  in  the  army  of  industry.  The  other  has 
been  forced  to  a  dependence  upon  charity,  has 
thereby  sacrificed  a  degree  of  his  manhood  and  self- 
respect,  and  will  probably  never  again  be  as  good  a 
member  of  society  as  before.  This  being  the  case, 
it  is  certainly  desirable,  under  a  competitive  system 
of  society,  that  as  large  a  percentage  of  the  population 
as  possible  be  equipped  with  this  safeguard  of  wealth — 
for  the  man  does  not  live  who  is  sure  of  escaping  the 
ills  and  accidents  that  befall  the  human  race. 

2.  Another  advantage  of  wealth,  akin  to  that  just 
cited,  is  that  it  gives  to  the  possessor  a  much  greater 
freedom  of  movement,  a  wider  sphere  of  action,  than 
is  otherwise  vouchsafed  to  him.  Without  wealth, 
one  is  seldom  in  a  position  to  bargain  well  as  to  wages 
or  salary.  One  must  find  a  position  and  so  the  first 
offer  must  be  accepted.  One  cannot  travel  from  place 
to  place  in  search  of  better  opportunities — for  travel 


56  WEALTH  AND  INCOME  OF 

costs  money.  As  a  result,  freedom  of  competition  is 
restricted,1  the  job  and  the  man  do  not  get  together, 
and  the  number  of  "square  pegs  in  round  holes", 
with  all  the  attendant  unhappiness,  is  bound  to  be 
materially  increased. 

3.  Another  useful  phase  of  widely  distributed 
ownership  of  wealth  is  that  it  makes  for  social  sta- 
bility. The  propertied  man  is  seldom  an  enemy  of 
law  and  order.  He  does  not  favor  revolution  for 
he  has  something  to  lose.  True,  he  may  be  too 
conservative,  but  history  does  not  show  that  those 
nations  have  advanced  most  in  which  revolution  has 
been  frequent.  The  nations  most  free  from  internal 
strife  and  bloodshed  are  those  in  which  a  large  fraction 
of  the  people  have  possessed  some  considerable 
property  and  have  been  able,  by  their  leadership,  to 
maintain  law  and  order.  And,  while  there  may  be 
dispute  as  to  whether  this  is  or  is  not  the  fundamental 
cause,  it  can  scarcely  be  denied  that  the  nations  which 
have  contributed  most  to  the  world  progress  of  the 
last  four  hundred  years  have  been  those  in  which 
there  existed  a  strong  and  virile  middle  class  to  whom 
anarchy  and  lawlessness  were  anathema.  On  the 

1  Many  writers  have  made  much  of  the  fact  that  the  ownership 
of  real  estate  hampers  the  movement  of  workingmen  with  families. 
While  this  is  true,  to  a  degree,  its  importance  has  probably  been 
exaggerated  for  it  apparently  applies  mainly  to  those  particular 
cases  in  which  there  is  no  local  competition  by  employers  for  the 
services  of  the  worker  and,  even  in  such  instances,  real  property 
is,  ordinarily,  not  difficult  to  lease. 


THE  PEOPLE  OF  THE  UNITED  STATES    57 

other  hand,  whether  we  turn  to  those  oriental  despo- 
tisms or  to  certain  Spanish-American  republics, 
which  have  alike  been  dominated  by  rich  and  power- 
ful grandees  supported  by  the  toil  of  a  half-beggared 
populace,  we  find  never-ending  cycles  of  riot  and 
revolution  and  observe  them  to-day  as  nations  politi- 
cally and  morally  a  century  behind  the  times. 

4.  The  fourth  great  advantage  of  widely  distrib- 
uted wealth  is  dynamic  rather  than  static  in  its 
nature.  This  depends  not  only  upon  the  fact  that 
many  people  now  possess  wealth  but  also  upon  the 
fact  that  they  acquired  this  property  by  their  own 
efforts.  If  many  people  were  well-to-do  but  if  all 
had  inherited  their  wealth,  the  propertyless  young 
man  would  then  feel  it  a  perfectly  futile  task  to 
attempt  to  acquire  a  competence.  No  one  in  the 
vicinity  having  succeeded  in  so  doing,  it  would 
evidently  be  a  waste  of  energy  to  try.  But,  on  the 
other  hand,  if  the  older  men  of  his  acquaintance  have 
attained  affluence  through  hard  work  or  use  of  their 
native  talents,  the  young  man  feels  that  he  can  do 
likewise.  Wealth  means  power  and  ease  and  luxury 
and  display.  These  lure  him  on  to  strenuous  en- 
deavor and  cause  him  to  toil  early  and  late  in  the 
pursuit  of  riches.  And  it  is  this  strenuous  endeavor 
of  the  millions  that  amasses  the  capital,  that  searches 
out  the  new  inventions  and  discoveries,  that  does  all 
those  things  which  spell  economic  progress. 


58  WEALTH  AND  INCOME  OF 

No  other  stimulus  to  labor  and  efficiency  has  ever 
been  more  powerful  than  this  desire  for  riches. 
Mere  hope  of  current  income  is  a  much  less  powerful 
incentive  to  action.  The  day  laborer  works  harder 
because  he  hopes  to  lay  aside  something  for  a  rainy 
day  and  for  old  age.  The  clerk  and  the  mechanic 
put  in  a  little  extra  time,  save  a  little  more,  in  order 
that  they  may  own  their  homes  and  educate  their 
children.  The  business  man  devotes  more  energy 
to  his  affairs  in  order  that  he  may  build  the  dreamed 
of  mansion  or  win  a  name  as  a  captain  of  industry. 
And  it  is  this  extra  effort,  this  saving  of  the  dollars 
accomplished  through  self-denial,  that  accumulates 
the  masses  of  capital — the  tools,  the  machines,  the 
ships,  the  railways,  the  buildings — essential  to 
modern  methods  of  industry.  Were  the  productivity 
of  the  great  masses  of  the  people  to  be  slackened  ever 
so  little,  their  savings  would  probably  decrease  in 
much  greater  proportion  for  it  is  usually  only  the 
surplus  above  bare  necessities  that  is,  in  part,  saved. 
The  savings  of  the  few  rich  would,  alone,  be  entirely 
inadequate  to  supply  the  capital  for  the  new  enter- 
prises required  to  produce  the  necessities  of  life  for 
our  growing  population  and,  without  the  accumula- 
tions of  the  common  people,  we  should  witness  a 
retrogression  in  industry,  wealth,  and  prosperity. 
Unless,  then,  other  untried  means  can  be  shown  to 
serve  equally  well  as  incentives  to  production,  the 


THE  PEOPLE  OF  THE  UNITED  STATES    59 

possibility  of  accumulating  wealth  must  be  regarded 
as  one  of  the  mainstays  of  our  economic  civilization. 
But,  it  must  be  kept  in  mind  that,  if  we  are  to  depend 
upon  the  possibility  of  accumulating  wealth  as  a  spur 
to  the  activity  of  mankind,  this  possibility  must  not 
be  merely  the  rare  chance  in  a  lottery.  To  a  certain 
type  of  mind,  the  millionth  chance  to  obtain  a  great 
fortune  may  prove  very  alluring,  but,  to  the  large 
mass  of  conservative  people,  such  opportunities 
appear  too  remote  to  lead  to  any  sustained  effort. 
To  the  majority,  a  reasonable  prospect  that  hard 
work  and  self-denial  will  bring  a  competence  for  old 
age  or  an  opportunity  for  leisure  and  pleasure  is 
necessary  in  order  to  materially  affect  their  activity 
as  producers  and  savers.  We  can  draw  conclusions 
concerning  the  future  only  by  a  study  of  past  and 
present  conditions.  If  it  is  known  that  a  large  frac- 
tion of  the  people  actually  do  succeed  in  gathering 
together  enough  property  to  be  worth  while,  the 
effort  to  imitate  them  will  continue  but,  if  the  great 
majority,  despite  their  striving  to  get  ahead,  die  in 
poverty — then  effort  is  sure  to  slacken  materially 
with  a  corresponding  loss  in  productivity  and  a  great 
decrease  in  savings.  One  of  the  principal  reasons 
for  the  poverty  of  the  masses  and  the  absence  of  any 
considerable  middle  class  in  the  Oriental  despotisms 
is  that  any  considerable  accumulation  of  wealth  by  a 
common  citizen  has  always  been  a  signal  for  plunder 


60  WEALTH  AND  INCOME  OF 

by  the  tax  gatherers.  As  a  result,  little  capital  has 
been  accumulated  and  industrial  progress  has  been 
rendered  next  to  impossible. 

We  have  enumerated  four  fundamental  advantages 
of  having  a  large  share  of  the  population  participate 
in  the  ownership  of  wealth.  Are  we  to  conclude, 
then,  that  a  practically  equal  division  of  wealth  is 
most  desirable  for  a  democracy?  Some  persons 
would  adhere  to  this  view  but  more  would  advocate  a 
moderate  degree  of  inequality  roughly  proportional 
to  the  general  ability  of  the  citizens.  By  the  term 
general  ability,  we  cannot  mean  ability  to  acquire 
wealth  under  existing  conditions,  else  we  beg  the 
whole  question.  We  must  refer  only  to  those  differ- 
ences in  skill  which  would  be  manifested  in  most 
branches  of  activity.  It  is  easy  to  find  a  man  in 
almost  any  line  of  employment  who  is  twice  as  ef- 
ficient as  another  employee  but  it  is  very  rare  to 
find  one  who  is  ten  times  as  efficient.  It  is  common, 
however,  to  see  one  man  possessing  not  ten  times  but 
a  thousand  times  the  wealth  of  his  neighbor.  This 
discrepancy  represents  ability  of  only  one  type — the 
faculty  of  taking  advantage  of  existing  laws  and 
circumstances  to  acquire  property  rights — and  these 
rights  are  too  frequently  obtained  by  flagrant  viola- 
tions of  the  spirit  if  not  the  letter  of  the  law.  It  must 
also  be  admitted  that  wealth  tends  to  breed  wealth — 
that  it  is  relatively  much  easier  for  the  rich  man  to 


THE  PEOPLE  OF  THE  UNITED  STATES    61 

cause  his  small  fortune  to  grow  into  a  large  one  than 
for  the  poor  man  to  accumulate  a  small  fortune. 

Is  there,  then,  any  social  advantage  in  allowing 
men  who  have  been  fortunate  enough  to  be  born  rich 
or  who  have  the  one  remarkably  developed  faculty 
of  being  able  to  amass  wealth  by  legal  or  illegal, 
honorable  or  dishonorable  means  to  collect  or  retain 
control  of  tremendous  masses  of  capital  and  land, 
drawing  annually  economic  revenue  therefrom?  Is 
this  more  desirable,  socially,  than  to  transfer  the 
wealth  of  the  world  for  safe-keeping  to  the  musical 
genius,  the  lightning  calculator,  or  some  other  person 
having  a  remarkable  development  of  some  one  natural 
gift? 

From  the  standpoint  of  merit,  one  of  these  prodigies 
is  exactly  as  much  entitled  to  be  a  Croesus  as  the 
other.  The  only  possible  excuses,  then,  for  allowing 
the  great  money-getter  to  retain  his  vast  gains  are 
that  society  is  too  lethargic  to  make  the  necessary 
effort  to  deprive  the  holder  of  his  money  or  that,  in 
some  way,  society  will  be  benefitted  by  allowing  the 
fortune  to  remain  in  his  hands.  The  defender  of  the 
millionaire,  of  course,  bases  his  arguments  upon  the 
latter  contention.  We  are  all  familiar  with  the 
reasons  cited  centuries  ago  for  the  maintenance  of  a 
leisure  class — the  desirability  of  fostering  art,  culture, 
etc.  These  are  now  so  much  more  widely  diffused 
than  in  the  older  days  that  arguments  of  this  nature 


62  WEALTH  AND  INCOME  OF 

have  lost  most  of  their  force.  About  the  only  serious 
reason  which  can  now  be  advanced  in  favor  of  wealth 
concentration  is  that  it  is  necessary  in  order  to  secure 
a  maximum  national  dividend — that  exceptional 
rewards  to  the  captains  of  industry  result  in  excep- 
tionally efficient  production,  thus  increasing  greatly 
the  incomes  of  the  people  as  a  whole.  This  belief  is 
not  necessarily  based  on  the  untenable  hypothesis 
that  enormous  rewards  are  necessary  in  order  to 
secure  the  requisite  high  degree  of  exertion  and 
endeavor  but  rather  it  is  contended  that,  if  there  were 
no  millionaires,  modern  large-scale  industry  would 
hardly  be  possible — that  corporations  without  leading 
stockholders  in  control  would,  at  best,  be  weak, 
vacillating  and  inefficient,  and  that  the  fifty  millions 
which  we  permit  the  industrial  captain  to  accumulate 
have  been  the  price  of  an  added  production  of  one 
hundred  million  or  two  hundred  million  dollars'  worth 
of  goods  which  society  would  never  have  possessed 
had  not  the  efficient  control  been  paid  for  at  a  tre- 
mendous price.  This  is  not  the  same  as  saying  that 
we  must  pay  the  great  organizer  so  exorbitantly  for 
his  efforts.  It  merely  presupposes  a  necessity  for  a 
great  accumulation  of  funds  in  the  hands  of  one  man 
in  order  to  attain  maximum  productivity.  The  great 
entrepreneur  is  made  a  trustee  for  society. 

The  opponents  of  this  theory  would  cite  the  fact 
that  many  of  the  very  wealthy  are  not  great  entre- 


THE  PEOPLE  OF  THE  UNITED  STATES    63 

preiveurs  and  do  little  by  their  efforts  or  by  their 
wealth  to  further  efficient  production.  They  would 
also  contend  that  it  has  not  been  conclusively  proved 
that  a  corporation  with  many  small  stockholders 
might  not  be  an  extremely  effective  working  organiza- 
tion, though  it  must  be  admitted  that  most  large 
cooperative  concerns  have  not  been  extremely  suc- 
cessful. As  a  matter  of  fact,  it  seems  to  be  true  that 
the  connection  between  concentrated  wealth  and 
efficient  large  scale  enterprise  is,  as  yet,  not  clearly 
understood.  If  industry  is  to  continue  under  the 
regime  of  private  property,  it  seems  desirable  either 
to  prove  the  dependence  of  successful  large  scale  pro- 
duction upon  the  concentration  of  wealth — thus 
justifying  this  concentration — or  else  to  admit  that 
our  laws  and  institutions  should  be  so  reconstructed 
as  to  maintain  that  type  of  distribution  deemed 
socially  most  desirable. 

We  have  now  considered  the  abstract  arguments 
for  and  against  a  wide  and  relatively  uniform  distri- 
bution of  wealth.  We  are  all  well  aware  that  the 
division  of  riches  in  the  United  States  is  far  from  being 
on  a  basis  of  equality.  As  to  just  how  far  removed 
from  equality  it  actually  is,  there  has  been  little 
unanimity  of  opinion  and  accurate  information  is 
scanty  and  little  known.  For  centuries,  America 
has  been  known  as  "The  Land  of  Opportunity." 
To  the  poverty  stricken  European  laborer,  it  is  a 


64:  WEALTH  AND  INCOME  OF 

country  in  which  a  few  years  suffice  to  convert  a 
pauper  into  a  prince.  On  the  other  hand,  to  many 
hard  working  Americans,  the  chances  for  affluence 
have  appeared  to  be  surprisingly  few.  The  question 
as  to  which  view  is  correct  can  only  be  settled  by 
statistical  inquiry  and,  as  yet,  but  few  investigations 
have  been  made  which  throw  light  upon  the  subject. 

THE  EXISTING  DISTRIBUTION  OF  WEALTH 

But,  we  are  interested  not  only  in  the  present  dis- 
tribution of  property  but  in  the  changes  that  have 
taken  place  therein.  Are  the  rich  getting  ever  richer 
and  the  poor  always  more  poverty  stricken?  Are 
the  domains  of  the  millionaires  continually  encroach- 
ing more  and  more  upon  the  modest  holdings  of  the 
middle  class  or  upon  the  petty  properties  of  the  poor? 
Is  the  middle  class  doomed  to  extinction  and  shall  we 
soon  find  the  handful  of  plutocrats,  the  modern  barons 
of  wealth,  lined  up  squarely  in  opposition  to  the 
propertyless  masses  with  no  buffer  between  to  lessen 
the  chances  of  open  battle?  With  the  middle  class 
gone  and  the  laborer  condemned  to  remain  a  lifelong 
wage-earner  with  no  hope  of  attaining  wealth  or  even 
a  competence  in  his  old  age,  all  the  conditions  are 
ripe  for  a  crowning  class-conflict  equalling  in  intensity 
and  bitterness  anything  pictured  by  the  most  radical 
follower  of  Karl  Marx.  Is  this  condition  soon  coming 
to  pass?  We  can  only  judge  the  future  by  the  past 


THE  PEOPLE  OF  THE  UNITED  STATES    65 

and  to  judge  intelligently  we  must  again  cast  aside 
all  preconceptions  and  prejudices  and  turn  to  un- 
biased statistical  evidence  for  our  answer.  As  before 
stated,  this  variety  of  information  is  meager  in  amount 
but  that  which  does  exist  throws  some  very  interesting 
light  upon  the  questions  which  we  are  seeking  to 
solve.  We  shall  consider  the  results  of  the  two 
investigations  whose  records  are  at  hand. 

The  principal,  and  best  known,  source  of  informa- 
tion is  the  Twenty-fifth  Annual  Report  of  the  Massa- 
chusetts Bureau  of  Labor.  This  Bureau  made  a 
careful  study  of  the  value  of  estates  probated  in 
Massachusetts  during  four  different  three  year 
periods,  viz.  1829-1831,  1859-1861,  1879-1881,  and 
1889-1891,  the  years  in  each  case  being  inclus- 
ive. The  results  appear  on  pages  265-267  of  their 
report. 

In  many  ways,  Massachusetts  is  a  state  very  well 
adapted  to  show  the  changing  tendencies  of  wealth 
distribution  in  the  United  States.  It  is  primarily 
industrial  in  nature  and,  if  property  is  being  concen- 
trated in  a  few  hands,  it  would  seem  more  likely  to 
be  the  case  in  an  industrial  than  in  an  agricultural 
state.  Furthermore,  Massachusetts  possesses  many 
cities,  one  being  a  great  metropolis,  and  concentration 
is  generally  thought  to  appear  far  more  strikingly  in 
the  city  than  in  the  rural  regions.  Yet,  Boston  is 
not,  like  New  York,  the  financial  headquarters  of 
6 


66  WEALTH  AND  INCOME  OF 

the  nation  and  so  would  be  less  likely  to  represent  a 
tendency  abnormal  to  the  country  as  a  whole. 

The  Massachusetts  statistics  possess  the  decided 
merit  of  having  all  estates  classified  as  to  ownership 
by  males  or  females.  On  the  other  hand,  the  chief 
defect  which  causes  difficulty  in  obtaining  an  accurate 
picture  of  the  distribution  of  estates  at  each  period 
is  that,  in  some  forty  per  cent  of  the  cases,  no  in- 
ventory was  filed  and,  hence,  the  size  of  the  estates  is 
unknown.  In  the  opinion  of  the  original  investi- 
gators, the  non-inventoried  estates  were  probably 
somewhat  larger  than  those  for  which  inventories 
appear.1  For  the  purposes  of  computation,  we  shall 
do  the  only  feasible  thing  and  assume  that  the  size 
and  distribution  of  non-inventoried  estates  did  not 
differ  materially  from  the  corresponding  figures  for 
those  estates  for  which  inventories  were  filed.  A 
comparison  with  the  mortality  figures  in  Massa- 
chusetts shows  that,  in  each  period,  the  number  of 
deaths  of  males  over  twenty-five  years  of  age  greatly 
exceeded  the  number  of  estates  probated.  The 
obvious  conclusion  is  that,  in  most  of  the  instances 
not  probated,  the  property  was  insignificant  in  value. 
We  shall  assume  that  five  hundred  dollars'  worth  was 
the  upper  limit  with  an  average  amount  of  $375 
in  the  first  period  and  $400  in  each  of  the  two  latter 
periods. 

1  Twenty-fifth  Annual  Report  of  the  Massachusetts  Bureau  of 
Labor,  p.  66. 


THE  PEOPLE  OF  THE  UNITED  STATES    67 

With  these  assumptions,  we  may  proceed  to  esti- 
mate the  distribution  of  wealth  among  men  in  Massa- 
chusetts at  death.  This,  if  accurate,  will  be  a  fair 
picture  of  the  value  of  property  actually  accumulated 
during  a  lifetime  and  will  enable  us  to  get  some  idea 
of  the  hope  of  accumulation  inspired  at  each  of  the 
given  periods  by  the  surroundings  of  the  average 
man — by  the  actual  success  of  his  neighbors.  It  will 
also  enable  us  to  see,  even  more  accurately  than 
could  the  man  at  the  time,  the  real  chances  for 
financial  success. 

We  must  remember,  however,  that  statistics  of  the 
estates  of  male  decedents  will  not  serve  to  show  the 
exact  distribution  of  wealth  among  those  persons 
living.  In  every  instance,  the  average  family  wealth 
is  greater  than  is  indicated  by  the  studies  of  the 
size  of  estates  of  men,  for  the  family  wealth  consists 
of  the  possessions  of  both  husband  and  wife  and,  in 
many  cases,  the  latter  owns  very  considerable  property 
in  her  own  name. 

This  underestimate  of  the  family  wealth  is  perhaps 
more  than  offset  by  the  fact  that,  in  a  country  like 
the  United  States,  the  average  man  is  probably 
richer  at  the  close  of  his  life  than  during  his  younger 
years.  This  latter  fact  does  not,  however,  impair 
the  usefulness  of  the  figures  for  the  purpose  in  hand, 
for  the  young  man  is  likely  to  be  far  more  inspired 
to  endeavor  by  the  knowledge  that  the  well-to-do 


68 


WEALTH  AND  INCOME  OF 
TABLE  IX 


THE  ESTIMATED  DISTRIBUTION  OF  ESTATES  OF  MEN  DYING 

IN  MASSACHUSETTS  3 

Total 

Percen- 

Value of 

Percen- 

j 

Value  of  Estate  in 
Thousands  of 

Number 
of 

tage  of 
Total 

Estates 
in  Class 

tage  of 
Total 

Ayerage 
Value  of 

1 

Dollars. 

Estates 

Number 

in  Thou- 

Value 

Estates  in 

m 

in  Class. 

of 

sands  of 

of 

Class 

Estates. 

Dollars. 

Estates. 

Total 

15,285' 

100.000 

55,071 

100.000 

$  3,603 

Under            0.5 

10,794 

70.620 

4,048 

7.350 

375 

0.5  but  under  1 

686 

4.488 

604 

1.097 

880 

1859 

1                    5 

2,279 

14.911 

6,153 

11.172 

2,700 

5                    10 

735 

4.808 

5,218 

9.475 

7,100 

to 

10                  25 

466 

3.048 

7,316 

13.284 

15,700 

25                  50 

151 

.9871     5,345 

9.705 

35,400 

1861 

50                  100 

90 

.588 

6,228 

11.310 

69,200 

100                200 

50 

.327 

6,535 

11.868 

130,700 

200                300 

19 

124 

4,551 

8.263 

239,500 

300                400 

5 

.033 

1,717 

3.118 

343,500 

400                500 

3 

.020 

1,425 

2.588 

475,000 

500  and  over 

7 

.046 

5,931 

10770 

848,700 

Total 

28,0862 

100000 

137,837 

100.000 

$  4,907 

Under            0.5 

21,361 

76058 

8,544 

6199 

400 

0.5but  under  1 

865 

3.079 

839 

609 

970 

1879 

1                    5 

3,114 

11.087 

8,564 

6.213 

2,750 

5                    10 

1,152 

4.101 

8,410 

6.101 

7,300 

to 

10                  25 

844 

3005 

13,420 

9.736 

15,900 

25                  50 

351 

1.250 

12,144 

8.810 

34,600 

1881 

50                  100 

193 

.687 

13,412 

9.730 

69,500 

100                200 

103 

.367 

14,573 

10.572 

141,500 

200                300 

40 

.142 

9,560 

6.935 

239,200 

300                400 

21 

.075 

7,398 

5.367 

352,300 

400                 500 

11 

.039 

4,829 

3.503 

439,000 

500  and  over 

31 

.110 

36,144 

26.225 

1,166,000 

1  Estimated  from  the  United  States  Census  for  1860,  Mortality 
and  Miscellaneous  Statistics,  p.  44 

2  Estimated    from  the  Twenty-eighth  Annual  Report    of   the 
Massachusetts  State  Board  of  Health,  pp.  744,  756 


THE  PEOPLE  OF  THE  UNITED  STATES          69 
TABLE  IK— Continued 


THE  ESTIMATED  DISTRIBUTION  OF  ESTATES  OP  MEN  DYING 

IN  MASSACHUSETTS. 

Total 

Percen- 

Percen- 

1 

Value  of  Estate  in 
Thousands  of 
Dollars 

Number 
of 
Estates 

tage  of 
Total 
Number 

Es  at  cs 
in  Class 
in  Thou- 

tage  of 
Total 
Value 

Average 
Value  of 
Estates  in 

PH 

in  Class. 

of 

of 

Class. 

Estates. 

Dollars. 

Estates. 

Total 

35,1484 

100.000 

202.695 

100.000 

$  5,767 

Under            0.5 

23,151 

65.864 

9,260 

4.568 

400 

0.5  but  under  1 

1,466 

4.172 

1,378 

.680 

940 

1889 

1                    5 

5,715 

16.282 

15,432 

7.614 

2,700 

5                    10 

2,005 

5.704 

14,637 

7.220 

7,300 

to 

10                  25 

1,612 

4.586 

25,791 

12.725 

16,000 

25                  50 

537 

1.528 

18,901 

9.324 

35,200 

1891 

50                  100 

334 

.950 

23,480 

11.585 

70,300 

100                200 

176 

.501 

24,148 

11.913 

137,200 

200                300 

59 

.168 

14,632 

7.218 

248,000 

300                400 

28 

.080 

9,492 

4.683 

339,000 

400                500 

18 

.051 

8,270 

4.080 

459,500 

500  and  over 

47 

.134 

37,274 

18.390     793,000 

men  of  his  acquaintance  have  gained  their  property 
by  their  own  efforts  than  he  would  be  by  seeing  that 
he  was  poor  while  many  other  young  men  were  rich. 
The  latter  comparison  is  likely  to  breed  envy  while 
the  former  gives  rise  to  ambition. 

Tables  IX  and  X  present  the  statistical  facts  of 
the  case  as  they  appear  when  adjustments  have  been 

8  Estimated,  in  general,  from  the  Twenty-fifth  Annual  Report 
of  the  Massachusetts  Bureau  of  Statistics  of  Labor,  pp.  264-267. 

4  Estimated  from  the  United  States  Census  for  1890,  Vital  and 
Social  Statistics,  Part  III,  p.  186. 


70 


WEALTH  AND  INCOME  OF 


made    according    to    the    assumptions    previously 

stated. 

TABLE  X 


CUMULATIVE1  PERCENTAGES  OF  THE  NUMBER  AND  VALUE 

OF  ESTATES  OF  MEN  DYING  IN  MASSACHUSETTS.2 

P 

ESTATES  OF  GIVEN  VALUE. 

o 

VALUE  OF  ESTATE 

M 
1 

I 

IN  THOUSANDS 
OF  DOLLABS. 

Number. 

Percentage 
of 

Total 

Value  in 
Thousands 
of 

Percentage 
of  Total 

Number. 

Dollars. 

Value. 

Under  0.5 

10,794 

70.620 

4,048 

7.350 

1 

11,480 

75.108 

4,652 

8.447 

5 

13,759 

90.019 

10,805 

19.619 

1859 

10 

14,494 

94.827 

16,023 

29.094 

25 

14,960 

97.875 

23,339 

42.378 

to 

50 

15,111 

98.862 

28,684 

52.083 

100 

15,201 

99.450 

34,912 

63.393 

1861 

200 

15,251 

99.777 

41,447 

75.261 

300 

15,270 

99.901 

45,998 

83.524 

400 

15,275 

99.934 

47,715 

86.642 

500 

15,278 

99.954 

49,140 

89.230 

All  estates 

15,285 

100.000 

55,071 

100.000 

Under  0.5 

21,361 

76.058 

8,544 

6.199 

1 

22,226 

79.137 

9,383 

6.808 

5 

25,340 

90.224 

17,947 

13.021 

1879 

10 

26,492 

94.325 

26,357 

19.122 

25 

27,336 

97.330 

39,777 

28.858 

to 

50 

27,687 

98.550 

51,921 

37.668 

100 

27,880 

99.267 

65,333 

47.398 

1881 

200 

27,983 

99.634 

79,906 

57.970 

300 

28,023 

99.776 

89,466 

64.905 

400 

28,044 

99.851 

96,864 

70.272 

500 

28,055 

99.890 

101,693 

73.775 

All  estates 

28,086 

100.000 

137,837 

100.000 

1  A  number  is  cumulative  when  it  includes  all  smaller  quanti- 
ties. 

2  Derived  from  Table  IX. 


THE  PEOPLE  OF  THE  UNITED  STATES         71 
TABLE  X— Continued 


CUMULATIVE  PERCENTAGES  OF  THE  NUMBER  AND  VALUE 

OF  ESTATES  OF  MEN  DYING  IN  MASSACHUSETTS. 

ESTATES  OF  GIVEN  VALUE. 

1 

• 

£ 

VALUE  OF  ESTATE 
IN  THOUSANDS 
OF  DOLLARS. 

Number. 

Percentage 
of 
Total 

Value  in 
Thousands 
of 

Percentage 
of  Total 

Number. 

Dollars. 

Value. 

Under  0.5 

23,151 

65.864 

9,260 

4.568 

1 

26,617 

70.036 

10,638 

5.248 

5 

30,332 

86.298 

26,070 

12.862 

1889 

10 

32,337 

92.002 

40,707 

20.082 

25 

33,949 

96.588 

66,498 

32.807 

to 

50 

34,486 

98.116 

85,399 

42.131 

100 

34,820 

99.066 

108,879 

53.716 

1891 

200 

34,996 

99.567 

133,027 

65.629 

300 

35,055 

99.735 

147,659 

72.847 

400 

35,083 

99.815 

157,151 

77.530 

500 

35,101 

99.866 

165,421 

81.610 

All  estates 

35,148 

100.000 

202,695 

100.000 

The  tables  show  definitely  the  wide  gulf  existing 
between  the  average  estate  of  the  richest  class  and 
the  average  holding  of  the  poorest  men.  They  show 
the  great  numbers  of  the  poor  as  compared  to  the 
little  handful  of  the  rich.  But,  by  use  of  the  curves 
devised  for  the  purpose  by  Dr.  Max  0.  Lorenz,  now 
statistician  of  the  Interstate  Commerce  Commission, 
it  is  much  easier  to  portray  clearly  in  our  minds  the 
relative  distribution  of  wealth  at  different  times  and 
places.  If  the  cumulative  percentages  of  Table  X 
are  plotted  against  each  other  as  shown  in  Figs.  4 
and  5,  the  relative  distribution  at  each  period  is 


72 


WEALTH  AND  INCOME  OF 


FIGURE  4 

RELATIVE  DISTRIBUTION  OF  WEALTH  AMONG  DECEDENTS, 
MASSACHUSETTS  AND  WISCONSIN1 


Oumnlative  Percentage  of  Value  of  Estates. 
<=>  S  8  g  £888  !__I___! 

\ 

\ 

\ 

s 

LEC 

END 

ass.    18M-1H61 
ass.   1879-1881 
ass.  '1888-1861 

"is.       1900. 

\ 

_   AJ 
_  M 
..   V 

\ 

\ 

X 

k 

S 

* 

^ 

'V) 

1 

3 

fe 

\ 

^ 

% 

\ 

3 

^ 

a 

^ 

t 

v 

V 

\ 

\ 

v^ 

\ 

\i> 

\ 

\ 

\ 

[\s 

X 

\ 

\; 

H 

^ 

—•  —  . 

l*rg 

Si 

Saa 

™r« 

^BS3 

JEW 

=•!» 

DBR 

FVS 

»= 

*5= 

sa 

100  90  80  70  60  60  40  30 

Cumulative  Percentage  of  Number  of  Estates, 
Beginning  with  those  of  .Least  Value. 

indicated  by  the  positions  of  the  curves.  If  each 
family  were  equally  wealthy,  evidently  one  fourth 
of  the  population  would  possess  one  fourth  of  the 

1  See  Tables  IX  and  X. 


THE  PEOPLE  OF  THE  UNITED  STATES    73 

wealth,  one  half  of  the  population  one  half  of  the 
wealth,  and  so  on,  and  the  resulting  graph  would  be 
a  straight  line  at  an  angle  of  forty-five  degrees,  as 
shown  in  the  illustration.  The  more  that  the  curves 
actually  bow  away  from  this  line  the  more  unequally 
is  wealth  distributed.  The  curves  in  Fig.  4  are  bent 
so  very  far  away  from  this  line  of  equal  distribution 
that  they  indicate  an  extremely  uneven  apportion- 
ment of  goods. 

Fig.  5  is  merely  a  reproduction  of  the  upper  seg- 
ment of  the  Lorenz  curves  shown  in  Fig.  4  but  the 
horizontal  scale  has  been  so  enlarged  as  to  separate 
the  graphs.  This  enables  one  to  study  the  distri- 
bution among  the  very  rich,  which  the  relatively 
small  horizontal  deflection  renders  impossible  in 
Fig.  4.  A  striking  thing  about  this  illustration  is 
that  there  is  so  little  discrepancy  between  the  different 
periods  for  Massachusetts.  Wealth  became  most 
unevenly  divided  about  1880  and,  since  that  time, 
there  has  been  a  slight  tendency  toward  greater 
equality  of  possessions.  But  no  one  could  seriously 
contend  that  the  figures  show  any  startling  change. 
The  general  distribution  was  not  greatly  different  in 
1890  from  what  it  was  in  the  days  immediately 
preceding  the  Civil  War  despite  the  fact  that  between 
the  two  dates  there  was  a  striking  growth  of  large 
scale  production.  During  these  thirty  years,  the 
volume  of  wealth  had  increased  much  faster  than 


WEALTH  AND  INCOME  OF 


had  the  population,  but  "the  few"  continuously 
possessed  the  lion's  share  and  "the  many"  had  almost 
nothing,  no  matter  which  of  the  three  periods  is 
taken  into  consideration.  , 

FIGURE  5 

RELATIVE  DISTRIBUTION  OF  ESTATES  OF  WEALTHY  DECEDENTS, 
MASSACHUSETTS  AND  WISCONSIN1 


A  30 


20 


10 


\ 


LEGEND 

Mass.  1869  - 1861 

Mass.  1879  - 1881 

Mass.  1888-1891 

Wis.  1900. 


100 


99  98  87 

Cumulative  Percentage  of  Number  of  Estates, 
Beginning  -with  those  of  Least  Value. 


1  See  Tables  IX  and  X. 


THE  PEOPLE  OF  THE  UNITED  STATES    75 

Before  going  into  greater  detail,  it  may  be  well  to 
compare  the  general  distribution  of  an  Eastern  State 
like  Massachusetts  with  that  in  the  six  counties  of 
Dane,  Grant,  Manitowoc,  Milwaukee,  Racine,  and 
Winnebago  in  the  Mississippi  Valley  State  of  Wis- 
consin. These  counties,  while  containing  much 
fertile  farm  land,  can  scarcely  be  held  to  be  typical 
of  the  agricultural  regions  of  the  United  States  for 
they  include  one  large  city,  Milwaukee,  and  three 
others  of  over  25,000  inhabitants.  The  concentration 
of  population  in  the  cities  of  these  counties  is  such  as 
to  make  them  fairly  comparable  in  their  character- 
istics to  the  State  of  Massachusetts.  The  Wisconsin 
investigation  covers  the  distribution  of  estates  during 
the  year  1900  in  the  six  counties  mentioned.  The 
results  were  compiled  in  manuscript  form  by  Dr.  Max 
Lorenz.  Since  this  inquiry  follows,  by  about  a 
decade,  the  last  of  the  Massachusetts  studies  it  might 
be  considered  as  a  possible  indicator  of  any  notable 
changes  occurring  near  the  close  of  the  last  c'entury. 
At  any  rate,  it  is  interesting  to  compare  these  figures 
with  those  worked  out  for  Massachusetts  in  order  to 
detect  marked  similarities  or  differences  between  the 
two. 

Fortunately,  as  in  the  case  of  Massachusetts,  the 
estates  of  males  were  differentiated  from  those  of 
females.  It  has  been  assumed,  likewise,  that  those 
dying  under  twenty-five  years  of  age  who  had  estates 


76 


WEALTH  AND  INCOME  OF 


worth  probating  were  a  negligible  fraction  of  the 
population  and  that  the  estates  not  probated  were 
included  in  the  list  of  those  valued  at  less  than  five 
hundred  dollars.  The  total  deaths  of  males  over 
twenty-five  years  of  age  was  approximated  from  the 
figures  shown  in  the  United  States  Census  of  Vital 
Statistics,  these  figures  probably  being  as  accurate  as 

any  available. 

TABLE  XI 


THE  ESTIMATED1  DISTRIBUTION,  ACCORDING  TO  VALUE,  OF  THE 

ESTATES  OF  ALL  MEN  OVER  TWENTY-FIVE  YEARS  OF  AGE 

DYING  IN  THE  COUNTIES  OF  DANE,  GRANT,  MANITOWOC 

MILWAUKEE,  RACINE,  AND  WINNEBAGO  IN  THE  STATE  OF 

WISCONSIN  IN  THE  YEAR  1900. 

Num- 

Percent- 

Total 
Value  of 

Percent- 

Value of  Estate  in 

ber 
of  Es- 

age of 
Total 

Estates  in 
Class  in 

age  of 
Total 

Average 
Value 

Thousands  of  Dollars. 

tates 

Number 

Thou- 

Value of 

of  Estates 

in 

of  Estates. 

sands  of 

Estates. 

in  Class. 

Class. 

Dollars. 

Total 

2,332 

100.000 

11,105 

100.000 

$  4,762 

Under  .5 

1,570 

67.323 

589 

5.304 

375 

.5  but  under      1.0 

74 

3.174 

53 

.477 

716 

1.0                       2.5 

165 

7.076 

286 

2.575 

1,733 

2.5                       5.0 

161 

6.904 

633 

5.700 

3,931 

5.0                       7.5 

108 

4.631 

607 

5.466 

5,620 

7.5                      10.0 

75 

3.216 

617 

5.566 

8,226 

10.0                     15.0 

66 

2.830 

788 

7.096 

11,940 

15.0                     25.0 

50 

2.144 

845 

7.609 

16,900 

25.0                     50.0 

33 

1.415 

1,116 

10.051 

33,812 

50.0                    100.0 

12 

.515 

835 

7.519 

69,583 

100.0                   500.0 

16 

.686 

3,492 

31.445 

218,220 

500.0  and  over 

2 

.086 

1,244 

11.202 

622,000 

1  Estimated  from  the  United  States  Census  on  Vital  Statistics 
for  1900  and  the  manuscript  study  by  Max  Lorenz  on  The 
Distribution  of  Wealth  in  Six  Wisconsin  Counties. 


THE  PEOPLE  OF  THE  UNITED  STATES    77 
TABLE  XII 


CUMULATIVE2  PERCENTAGES  OF  THE  NUMBER  AND  VALUE  OF 
ESTATES  OF  MEN  DYING  IN  THE  YEAR  1900  IN  Six  WISCON- 
SIN COUNTIES.1 

VALUE  OF  ESTATES  IN 
THOUSANDS  OF  DOLLARS. 

ESTATES  OF  GIVEN  VALUE. 

Number. 

Percentage 
of  Total 
Number. 

Value  in 
Thousands 
of  Dollars. 

Percentage 
of  Total 
Value. 

Under     0.5  

1,570 
1,644 
1,809 
1,970 
2,078 
2,153 
2,219 
2,269 
2,302 
2,314 
2,330 
2,332 

67.323 
70.497 
77.573 
84.477 
89.108 
92.324 
95.154 
97.298 
98.713 
99.228 
99.914 
100.000 

589 
642 
928 
1,561 
2,168 
2,785 
3,573 
4,418 
5,534 
6,369 
9,861 
11,105 

5.304 
5.781 
8.356 
14.056 
19.522 
25.078 
32.174 
39.783 
49.834 
57.353 
88.798 
100.000 

1.0  

2.5  

5.0  

7.5  

10.0  

15.0  

25.0  

50.0  

100.0  

500.0  

All  estates  

The  comparison  is  most  easily  made  by  reference 
to  the  Lorenz  curves  in  Figs.  4  and  5.  These  graphs 
demonstrate  clearly  that,  whether  we  consider  the 
population  as  a  whole,  or  only  the  richest  three  per 
cent  of  the  men,  the  distribution  bears  a  striking 
resemblance  to  that  found  to  exist  a  decade  earlier  in 
Massachusetts.  True,  there  is  not  quite  as  great 
inequality  in  Wisconsin  as  existed  in  the  New  Eng- 
land State  but  the  difference  is  not  at  all  startling,  in 
fact,  is  less  than  one  would  anticipate  in  two  different 

1  Derived  from  Table  XI. 
*  See  note  to  Table  X. 


78  WEALTH  AND  INCOME  OF 

regions  with  conditions  of  industry  differing  as  widely 
as  is  the  case  in  these  two  sections. 

The  Lorenz  curves  possess  the  highest  degree  of 
utility  and  simplicity  for  comparing  the  general 
phases  of  the  relative  distribution  of  wealth.  The 
very  attributes  that  make  these  graphs  especially 
useful  for  this  purpose  make  them  of  less  value  for 
purposes  of  a  detailed  analysis  and  absolutely  worth- 
less if  it  is  desired  to  make  comparisons  on  an  absolute 
rather  than  on  a  relative  basis.  Table  XIII  has  been 
constructed  with  a  view  to  bringing  into  stronger 
relief  some  of  the  more  important  facts. 

For  purposes  of  this  comparison,  it  has  been  deemed 
best  to  divide  the  entire  number  of  decedents  into 
four  classes:  the  poor,  comprising  65  per  cent  of  the 
people;  the  lower  middle  class,  composed  of  the 
next  15  per  cent  of  the  inhabitants;  the  upper  middle 
class,  made  up  of  the  next  18  per  cent  in  order  of 
wealth;  and  the  rich,  who  form  the  last  2  per  cent  of 
the  population.  This  classification  should  be  kept 
in  mind  for  it  will  be  adhered  to  throughout  the 
remainder  of  this  chapter.  The  reader  will  observe 
that  these  classes  differ  materially  in  numbers  con- 
tained. The  poorest  class  consists  of  those  possessing 
little  or  no  property  except  furniture,  clothing,  and 
personal  belongings.  The  lower  middle  class  includes 
persons  having  a  little  property — perhaps  a  thousand 
dollars'  worth  on  the  average.  This  amount  is 


THE  PEOPLE  OF  THE  UNITED  STATES 


79 


sufficient  to  be  of  help  in  tiding  them  over  in  cases 
of  emergency  but  is  not  sufficient  to  yield  them  any 
noticeable  income.  The  upper  middle  class  consists 
of  the  well-to-do,  possessing  property  valued  at  from 


TABLE  XIII 


HOLDINGS   OP   DIFFERENT  FRACTIONS  OF  THE   POPULATION 
CLASSIFIED  ACCORDING  TO  WEALTH.* 

Class  of  Popula- 
tion. 

State  and  Date. 

Per- 
cent- 
age of 
Total 
Estates 
Owned 
by 
Class. 

Average 
Value  of 
Estate  in 
Dollars. 

Price 
Index 
for 
Period.1 

Index  of 
Real 
Value  of 
Estate. 

Heal 
Value 
of  Es- 
tate 
Com- 
pared 
to  Mass. 
1859- 
1861  as 
base. 

Poorest, 
65% 
of 
Population. 

Mass.  1859-1861 
Mass.  1879-1881 
Mass.  1889-1891 
Wis.  1900 

6.5 
5.0 
4.5 
5.2 

$      360 
377 
399 
381 

141.0 
147.5 
112.9 
110.5 

255 
256 
353 
345 

100.0 
100.3 
138.4 
135.3 

Lower  middle 
class, 
65  to  80%. 

Mass.  1859-1861 
Mass.  1879-1881 
Mass.  1889-1891 
Wis.  1900 

4.2 
1.9 
3.9 
4.8 

1,009 
622 
1,499 
1,524 

141.0 
147.5 
112.9 
110.5 

716 
422 
1,328 
1,379 

100.0 
58.9 
185.5 
192.6 

Upper  middle 
class, 
80  to  98%. 

Mass.  1859-1861 
Mass.  1879-1881 
Mass.  1889-1891 
Wis.  1900 

32.4 
26.5 
32.8 
33.0 

6,485 
7,224 
10,509 
8,730 

141.0 
147.5 
112.9 
110.5 

4,600 
4,897 
9,308 
7,901 

100.0 
106.5 
202.3 
171.8 

Richest, 

2%. 

Mass.  1859-1861 
Mass.  1879-1881 
Mass.  1889-1891 
Wis.  1900 

56.9 
66.6 
58.8 
57.0 

102,500 
163,415 
169,550 
135,715 

141.0 
147.5 
112.9 
110.5 

72,696 
110,800 
150,190 
122,830 

100.0 
152.4 
206.6 
169.0 

1  Index  for  middle  year  of  period.     Bureau  of  Labor  index  of 
wholesale  prices;  base  1890-1899. 
*  Derived  from  Tables  IX,  X,XI,  and  XII. 


80  WEALTH  AND  INCOME  OF 

$2,000  to  $40,000 — persons  usually  deriving  a  con- 
siderable share  of  their  income  from  investments 
but  dependent  upon  their  own  exertions  for  the  major 
part  of  the  same.  The  rich,  or  those  having  wealth 
of  more  than  $50,000,  are  in  a  position  to  live  mainly 
on  their  incomes  from  property  if  they  so  desire. 
The  percentage  of  men  who,  just  preceding  their 
death,  fell  in  each  of  these  classes  is  extremely  sig- 
•nificant.  The  first  point  to  be  noted  is  the  fraction  of 
the  total  wealth  possessed  by  each  of  these  great 
classes  of  the  population.  When  we  look  at  the  bars 
in  Fig.  6,  we  perceive  that,  while  the  shares  of  wealth 
belonging  to  each  class  differ  somewhat  with  time  and 
location,  nevertheless,  the  shares  have,  on  the  whole, 
remained  remarkably  constant  in  Massachusetts 
and  do  not  differ  materially  from  those  in  Wisconsin. 
The  following  statements  apply  to  all  the  instances 
studied.  The  poorest  two-thirds  of  the  people  own 
but  a  petty  five  or  six  per  cent  of  the  wealth  and  the 
lower  middle  class  possesses  a  still  smaller  share. 
Thus,  the  poorest  four-fifths  of  the  population,  own 
scarcely  ten  per  cent  of  the  total  wealth  of  the  land. 
The  upper  middle  class  makes  a  better  showing 
having  about  one-third  of  all  the  wealth  in  its  posses- 
sion. It  is  to  this  class,  probably,  that  ideal  con- 
ditions of  property  ownership  can  best  be  ascribed. 
Here,  the  resources  on  hand  add  greatly  to  the  feeling 
of  security  from  poverty  in  time  of  misfortune.  The 


THE  PEOPLE  OF  THE  UNITED  STATES 


81 


income  from  the  accumulated  wealth  is  sufficient  to 
obtain  many  comforts  and  luxuries,   yet  it   is  not 

FIGURE  6 

FRACTIONS  OF  TOTAL  WEALTH  BELONGING  TO  DIFFERENT 

CLASSES  OF  THE  POPULATION  j1 
MASSACHUSETTS  1859-1891,  WISCONSIN  1900. 


Mass.    1859-1861 

m 

Poorest 

65 

Mass.    1879-1881 

• 

Per  Cent 

of 

Mass.    1889-1891 

• 

Population 

Wls.      1900. 

" 

Mass.    1859-1861 

• 

Xowoi 

Middle 

Mass.     1879  -  1881 

1 

Class 

65-80 

Mass.    1889-1891 

H 

PerCent 

Wls.     1900. 

• 

Mass.    1859-1861 

mmmammmmm 

Upper 

Middle 

Mass.    1879  -  1881     •^••••••1 

Class 

80-98 

Mass.    1889-1891     ^•••••••M 

Per  Cent 

Wis.      1900. 

m-mmnssaam 

Mass.    1859  -  1861 

t>  I  nVi  «»of 

Mass..   1879  -  1881 

lllCA68t 

2 

CpA1.  Pont 

Mass.    1889  -  1891 

JTUl  \JoU-V 

WIS.     1900- 

010203040506070 
Percentage-of  Total  Wealth  Owned 


1  See  Table  XIII. 
7 


82  WEALTH  AND  INCOME  OF 

sufficient  to  tempt  the  recipient  to  a  life  of  idleness  or 
extravagance.  The  accumulations  are  not  large 
enough  to  enable  wealth  to  be  used  as  an  instrument  of 
oppression  or  in  the  securing  of  great  political  power. 
It  is  this  fraction  of  the  population,  then,  for  which  the 
believer  in  democracy  is  likely  to  desire  expansion. 

The  richest  class,  despite  the  fact  that  it  includes 
but  two  per  cent  of  the  population,  possesses  the 
lion's  share  of  the  accumulated  wealth.  More  than 
half,  in  fact,  almost  three-fifths  of  the  property  is 
possessed  by  this  fiftieth  part  of  the  people.  A  refer- 
ence to  Fig.  5  shows  us  that  the  richest  one  per  cent 
of  the  men  dying  owned  almost  one-half  of  the  value 
of  all  the  estates  while  one-fourth  of  the  entire  property 
was  in  the  hands  of  one-four  hundredth  part  of  the 
people.  This  means  that  each  of  these  men  in  the 
richest  four  hundredth  part  of  the  population  pos- 
sessed a  hundred  times  the  wealth  of  the  average 
citizen.  With  these  facts  before  us,  we  are  in  a 
condition  to  answer  more  intelligently  the  question 
propounded  earlier  in  this  chapter — "Is  the  distri- 
bution of  wealth  such  as  to  act  as  an  incentive  to 
industry  and  thrift  or  is  it  such  as  to  impress  the 
ordinary  man  with  the  hopelessness  of  his  situation?" 
The  facts  of  the  case  seem  to  be  that,  for  the  young 
man  having  the  average  start  in  life,  the  chances  are 
about  one  to  four  or  five  that  he  will  accumulate 
property  worth  mentioning  and  about  one  in  fifty 


THE  PEOPLE  OF  THE  UNITED  STATES    83 

that  he  will  become  moderately  wealthy.  It  is,  of 
course,  true  that,  for  the  young  man  with  scanty 
resources  but  with  plenty  of  brains,  the  chances  are 
far  better  than  for  the  man  under  similar  conditions 
but  without  much  intelligence,  but,  in  each  case,  the 
natural  optimism  of  the  average  youth  is  likely  to 
lead  him  to  anticipate  a  far  larger  reward  than  his 
prospects  actually  justify  him  in  expecting.  Most 
of  us  are  willing  to  take  chances  and  trust  to  our 
lucky  star  and,  since  human  nature  is  so  constituted, 
it  follows  that  property,  as  at  present  distributed,  does 
act  as  a  powerful  incentive  to  effort  and  saving. 
Even  the  one  chance  in  fifty  of  collecting  a  consider- 
able fortune  is,  no  .doubt,  a  decided  stimulus  to  a 
certain  important  fraction  of  the  people  but,  with  the 
majority,  it  is  probably  an  insignificant  factor  as 
compared  to  the  relatively  so  much  larger  chance  of 
gathering  together  enough  to  buy  the  coveted  home 
or  secure  the  longed-for  luxuries. 

The  differences  between  the  classes  are  decidedly 
more  striking  than  are  the  changes  that  have  taken 
place.  In  the  entire  array,  the  only  notable  vari- 
ation occurred  in  Massachusetts  in  the  period  1879- 
1881  when  the  rich  gained  decidedly  at  the  expense 
of  the  middle  classes.  In  the  next  decade,  however, 
the  relative  positions  were  once  more  resumed. 

The  most  interesting  comparison  is  that  showing  the 
absolute  changes  in  the  wealth  of  each  of  the  four 


84  WEALTH  AND  INCOME  OF 

classes  in  Massachusetts  and  the  relations,  in  each 
case,  to  the  wealth  of  the  same  class  in  Wisconsin. 
For  this  purpose,  it  is  necessary  to  take  into  consider- 
ation the  change  in  the  price  level  at  the  different 
dates.  This  correction  having  been  made,  we  obtain 
the  relative  figures  given  in  the  last  column  of  Table 
XIII.  The  graphic  portrayal  in  Fig.  7  is  more  easily 
interpreted  at  a  glance. 

Fig.  7  shows  that,  during  the  thirty  years,  in 
Massachusetts,  each  class  of  the  inhabitants  became 
somewhat  richer  but,  while  the  estates  of  the  poorest 
increased  by  only  about  one  third,  those  of  the  other 
classes  were  approximately  doubled.  The  accuracy 
of  this  statement  is  open  to  some  question,  inasmuch 
as  the  wealth  of  the  poorest  part  of  the  population 
was,  in  each  case,  principally  estimated.  It  seems 
safe  to  say,  however,  that  the  rich  have  been  growing 
decidedly  richer  but  that  the  poor  are  not  becoming 
poorer  but  are  also  gaining  in  wealth,  though  rela- 
tively at  a  less  rapid  pace  than  the  rich. 

No  startling  difference  appears  in  the  relative 
wealth  of  the  different  classes  in  Wisconsin  as  com- 
pared to  Massachusetts,  but  it  seems  moderately 
certain  that,  in  the  older  state,  the  rich  are  somewhat 
richer  than  in  the  newer  commonwealth.  The  sharp 
decline  in  the  wealth  of  the  lower  middle  class,  shown 
by  the  Massachusetts  figures  for  1880,  is  the  one 
marked  exception  to  the  general  trend  of  events. 


THE  PEOPLE  OF  THE  UNITED  STATES 


85 


FIGURE  7 

THE  RELATIVE  WEALTH  OF  THE  AVERAGE  DECEDENT  IN  EACH 
FRACTION  OF  THE  POPULATION  AS  COMPARED  WITH  THE  AVERAGE 
WEALTH  OF  THE  SAME  FRACTION  IN  MASSACHUSETTS  IN  1859- 
1861.1 

MASSACHUSETTS  1859-1861  =  100  PER  CENT. 


Mass.    1859-1861      LHHHHHHH 

Poorest 

| 

65 

Mass.    1879-1881      !•••••••• 

Per  Cent 

of 

Mass,    1889-1891      taHMBBHHMBH 

Population 

Wis.     1900             LEBHMKMBBM 

Mass.     1859  -  1861 

— 

Iiower 

Middle 

Mass.    1879-1881 

BMBBBB 

Class 

Mass.     1889  -1891 

Per  Cent 

"Wis       1900 

Mass;     1859-1861 

^"^™ 

Upper 

1 

Middle 

Mass.     1879  -  1881 

mm 

Class 

Mass     1889  -  1891 

Per  Cent 

Wis       1900 

Mass.     1859-1861 
Mass.     1879  -  1881 



Richest 
2 

Mass.    1889  -  1891 

Per  Cent 

Wis.      1900. 

0  50         100        150        200        250 

Index  of  Change  In  Size  of  -Estate 


1  See  Table  XIII. 


86  WEALTH  AND  INCOME  OF 

This  illustration  reiterates  the  fact  brought  out 
by  the  Lorenz  graphs  that,  while  wealth  distribution 
is  extremely  unequal,  there  is  no  marked  progress 
toward  greater  concentration  in  the  hands  of  the  few. 
We  may  believe  that  conditions  are  very  bad,  but 
we  can  scarcely  establish  the  oft  repeated  contention 
that  they  are  growing  rapidly  worse. 

Having  shown  beyond  reasonable  doubt  that 
wealth  is  very  unequally  distributed,  the  next  logical 
step  is  to  see  if  any  light  can  be  thrown  upon  the  cause 
of  such  distribution.  A  natural  method  is  to  inquire 
into  the  conditions  in  other  countries  of  differing 
characteristics  in  order  to  see  what  are  the  effects  of 
such  differences.  Is  property  more  concentrated  in  a 
land  in  which  a  system  of  primogeniture  prevails? 
Does  concentration  increase  as  the  nation  grows 
older?  Is  it  greater  or  less  in  the  rich  nation  than  in 
the  poor  nation?  To  some  of  these  questions  we 
shall  seek  to  give  at  least  tentative  answers. 

The  most  complete  statistics  of  wealth  distribution 
available  seem  to  be  those  compiled  by  the  govern- 
ment of  France.  There,  all  estates,  large  and  small, 
appear  to  be  listed.  Unfortunately,  the  estates  of 
men  are  not  separated  in  the  records  from  those  of 
the  women.  This  probably  will  affect  but  slightly 
the  relative  distribution  but  it  will  doubtless  make 
the  estates,  in  general,  appear  a  little  smaller  than 
they  really  are  as  compared  to  the  estates  of  Massa- 


THE  PEOPLE  OF  THE  UNITED  STATES 


87 


chusetts  or  Wisconsin,  for  the  probated  estates  of 
women  probably  average  a  little  less  in  value  than 
those  of  the  men.  Presumably,  however,  rather  a 
small  fraction  of  the  women  have  estates  worth 
probating. 

TABLE  XIV 


DISTRIBUTION,  ACCORDING  TO  VALUE,  OP  ESTATES  PROBATED 

IN  FRANCE  IN  1909.1 

Millions 

Percent- 

Percent- 

Number 

age  of 

age  of 

Value  of  Estate  in  Francs. 

of  Estates 

of  All 

Total 

Total 

in  Class. 

Estates 

Number 

Value 

in  Class. 

of  Estates. 

of  Estates. 

Excess  of  debts  

13,897 



3.533 

1  to             500.  .  . 

103,438 

26.96 

26.301 

.470 

501               2,000... 

101,178 

129.94 

25.722 

2.264 

2,001             10,000... 

110,427 

543.25 

28.076 

9.464 

10,001             50,000... 

48,755 

1,026.51 

12.396 

17.881 

50,001            100,000.  .  . 

7,692 

529.56 

1.956 

9.224 

100,001           250,000... 

4,822 

758.74 

1.226 

13.218 

250,001           500,000... 

1,720 

605.66 

.437 

10.551 

500,001         1,000,000... 

810 

554.40 

.206 

9.658 

1,000,001        2,000,000... 

373 

512.17 

.095 

8.922 

2,000,001         5,000,000.  .  . 

145 

425.61 

.037 

7.414 

5,000,001       10,000,000.  .  . 

46 

303.30 

.012 

5.284 

10,000,001       50,000,000.  .  . 
50,000,001  and  over  

10 
2 

179.94 
144.40 

}   .003 

3.135 
2.515 

Totals  

393,315 

5,740.44 

100.000 

100.000 

The  levying  of  the  inheritance  tax  results,  in  the 
United  Kingdom,  just  as  in  France,  in  the  compilation 
of  statistics  of  estates.  However,  the  figures  for 

1  Annuaire  Statistique  for  1910,  p.  221.  This  is  practically  a 
complete  record  of  all  estates  probated  in  France.  The  percent- 
ages have  been  computed  by  the  present  author. 


88 


WEALTH  AND  INCOME  OF 


estates  under  £100  are  much  less  complete  than 
those  for  the  poorer  classes  of  France.  Two  assump- 
tions were  made  in  the  construction  of  Table  XVI: 
first,  that  the  estates  of  the  poorest  class  of  men 
averaged  £60  each;  and  second,  that  the  women 
owned  the  same  fraction  of  the  number  and  value 
of  estates  as  in  Massachusetts  in  1890.  The  last 
assumption  is  probably  faulty  but  it  does  not  affect 
the  relative  distribution  in  any  material  way.  Table 
XVII  is  derived  directly  from  Table  XVI. 

The   only   available   clue   to   the   distribution   of 

TABLE  XV 


DISTRIBUTION,  ACCORDING  TO  VALUE,  OP  ESTATES  PROBATED 
IN  FRANCE  IN  1909.1 

Value  of  Estate  in  Francs. 

Number 
of  Estates. 

Value  of 
Estates  in 
Millions 
of  Francs. 

Percent- 
age of 
Total 
Number 
of  Estates. 

Percent- 
age of 
Total 
Value 
ofEstates. 

Excess  of  debts  

13,897 
117,335 
218,513 
328,940 
377,695 
385,387 
390,209 
391,929 
392,739 
393,112 
393,257 
393,303 
393,313 
393,315 

26.96 
156.90 
700.15 
1,726.66 
2,256.22 
3,014.96 
3,620.62 
4,175.02 
4,687.19 
5,112.80 
5,416.10 
5,596.04 
5,740.44 

3.533 
29.834 
55.556 
83.632 
96.028 
97.984 
99.210 
99.647 
99.853 
99.948 
99.985 
99.997 
99.997 
100.000 

.470 
2.734 
12.198 
30.079 
39.303 
52.521 
63.072 
72.730 
81.652 
89.066 
94.350 
97.485 
100.000 

500  or  less.         

2,000             

10  000             

50000             

100  000             

250,000             

500,000             

1,000,000             

2,000,000             

5,000,000             

10,000,000             

50,000,000             

All  estates  

Computed  from  preceding  table. 


THE  PEOPLE  OF  THE  UNITED  STATES 


89 


wealth  in  Prussia  is  obtained  from  the  records  of 
the  property  tax  which  are  closely  connected  with 
those  of  the  income  tax. 

TABLE  XVI 


THE  ESTIMATED!  DISTRIBUTION  OF  WEALTH  AMONG  MEN 
OVER  TWENTY-FIVE  YEARS  OF  AGE  DYING  IN  THE  UNITED 
KINGDOM,  1907-1911. 

Value  of  Estate. 

Number 
of 
Estates 
in 
Class. 

Value  In 
Millions 
of  Pounds 
of  all 
Estates 
in  Class. 

Percent- 
age of  To- 
tal Num- 
ber of 
Estates. 

Percent- 
age of 
Total 
Value  of 
Estates. 

Less  than  £100  

162,311 
22,320 
6,818 
10,920 
1,478 
548 
180 
162 
55 
32 
11 
5 

9.74 
7.72 
6.75 
47.56 
30.12 
24.67 
13.82 
21.15 
13.08 
14.45 
9.96 
14.19 

79.23 
10.89 
3.33 
5.34 
.72 
.27 
.09 
.08 

I    .05 

4.57 
3.62 
3.17 
22.31 
14.13 
11.57 
6.48 
9.92 
6.13 
6.78 
4.67 
6.65 

£        100  but  under         500 
500    "       '            1,000 
1,000                      10,000 
10,000                     25,000 
25,000                      50,000 
50,000                     75,000 
75,000                    150,000 
150,000                    250,000 
250,000                    500,000 
500,000                 1,000,000 
1,000,000  and  over    

Totals  

204,840 

213.21 

100.00 

100.00 

Since  estates  under  6,000  marks  in  value  are  un- 
taxed  and  unrecorded  and  since  the  great  majority 

1  Sources  of  information — Statistical  Abstract  of  the  United 
Kingdom  for  1911,  p.  42,  and  the  Reports  of  the  Registrar  General 
on  Births,  Deaths,  and  Marriages  in  England,  Wales,  Scotland,  and 
Ireland.  It  has  been  assumed  that  women  own  the  same  share 
of  estates  in  England  as  in  Massachusetts.  This  assumption 
may  be  faulty  but  no  figures  are  available.  The  figures  have 
been  averaged  for  the  five  years  1907-1911  inclusive. 


90 


WEALTH  AND  INCOME  OF 


of  the  families  possess  property  less  in  value  than 
6,000  marks,  all  estimates  are  subject  to  a  very  large 
margin  of  error.  It  is  believed  that  Tables  XVIII  and 
XIX  represent,  however,  a  fairly  good  approximation 
to  the  facts  of  the  case,  considering  the  meagerness 

TABLE  XVII 


THE  ESTIMATED  DISTRIBUTION  OF  WEALTH  AMONG  MEN  OVER 
TWENTY-FIVE  YEARS   OF  AGE    DYING    IN   THE    UNITED 
KINGDOM,  1907-1911.1 

Value  of  Estate. 

Number 

ofEstates. 

Value  of 
Estates  in 
Millions 
of 
Pounds. 

Percent- 
age of 
Total 
Number 
ofEstates. 

Percent- 
age of 
Total 
Value 
ofEstates. 

Less  than  £        100  

162,311 
184,631 
191,449 
202,369 
203,847 
204,395 
204,575 
204,737 
204,792 
204,824 
204,835 
204,840 

9.74 
17.46 
24.21 
71.77 
101.89 
126.56 
140.38 
161.53 
174.61 
189.06 
199.02 
213.21 

79.23 
90.12 
93.45 
98.79 
99.51 
99.78 
99.87 
99.95 
99.98 
99.99 
99.99 
100.00 

4.57 
8.19 
11.36 
33.67 
47.80 
59.37 
65.85 
75.77 
81.90 
88.68 
93.35 
100.00 

500  

1,000  

10,000  

25,000  

50,000  

75,000  

150,000  

250,000  

500,000  

1,000,000. 

All  estates  

of  the  data  upon  which  one  must  rely.  The  estimates 
in  Tables  XV,  XVII,  and  XIX  are  graphically  com- 
pared in  Figs.  8  and  9. 

From  these  graphs,  we  discover  the  interesting 
fact  that  there  appears  to  be  no  marked  difference 
in  the  distribution  of  wealth  in  France  or  Prussia  in 

1  Computed  from  preceding  table. 


THE  PEOPLE  OF  THE  UNITED  STATES 


91 


1908  from  that  in  Wisconsin  in  1900.  In  other  words, 
two  old  nations,  one  a  monarchy  and  the  other  a 
republic,  show  approximately  the  same  distribution 
as  that  occurring  in  a  state  in  the  Mississippi  Valley 
and  we  have  seen  the  close  accord  in  this  respect 
between  Wisconsin  and  Massachusetts. 

TABLE  XVIII 


THE  DISTRIBUTION  OP  WEALTH  AMONG  PRUSSIAN  FAMILIES, 

ESTIMATED  PROM  TAX  ASSESSMENTS  FOR  1908.1 

ii 

"1 

•8*8 

^  . 

*5 

5^ 

lf| 

||| 

Family  Wealth  in  Marks. 

K 

*®  a 

SizS 

&  ^  <P 

i  j 

5  § 

§•3  ft 

«3 

a" 

«3 

o 

OH  O 

K 

£8 

H 

Less  than  6,000  

10,994,0002 

153 

85.880 

13.76 

6,000  and  under       20,000 

871,000 

9 

6.804 

8.26 

20,000                        52,000 

627,000 

18 

4.897 

16.51 

52,000                       100,000 

169,000 

12 

1.3201 

11.01 

100,000                       200,000 

77,900 

11 

.608 

10.09 

200,000                       500,000 

42,200 

13 

.330 

11.93 

500,000                    1,000,000 

12,749 

9 

.100 

8.26 

1,000,000                    5,000,000 

7,213 

14 

.056 

12.84 

5  000,000          above  

662 

K 

.005 

7.34 

Totals  

12,801,724 

109 

100.000 

100.00 

1  Computed  from  Die  Zeitschrift  des  Koniglichen  Preussischen 
Statislischen  Landesamts,  pp.  xxii,  xxiii,  xl. 

2  The  remainder  of  the  estimated  heads  of  families  and  inde- 
pendent single  persons  in  Prussia. 

3  Estimated  from  a  curve,  the  assumption  being  that  the  curve 
for  small  properties  would  resemble  in  form  that  known  to  exist 
for  France. 


92 


WEALTH  AND  INCOME  OF 
TABLE  XIX 


THE  DISTRIBUTION  OP  WEALTH  AMONG  PRUSSIAN  FAMILIES, 
ESTIMATED  FROM  TAX  ASSESSMENTS  FOR  1908.1 

Family  Wealth  in  Marks. 

Number  of 
Families. 

Wealth 
in  Bil- 
lions of 
Marks. 

Percentage 
of  Total 
Number  of 
Families. 

Percent- 
age of 
Total 
Amount 
of 
Wealth. 

Less  than         6,000... 
20,000.  .  . 
52,000... 
100.000... 
200,000... 
500,000... 
1,000,000... 
5,000,000... 
All  families  

10,994,000 
11,865,000 
12,492,000 
12,661,000 
12,738,900 
12,781,100 
12,793,849 
12,801,062 
12,801,724 

15 
24 

42 
54 
65 
78 
87 
101 
109 

85.880 
92.684 
97.581 
98.901 
99.509 
99.839 
99.939 
99.995 
100.000 

13.76 
22.02 
38.53 
49.54 
59.63 
71.56 
79.82 
92.66 
100.00 

A  reasonable  explanation  of  this  striking  similarity 
is  the  supposition  that,  given  a  competitive  system  of 
industry  and  trade  and  similar  laws  of  property  and 
contract,  wealth  tends  to  be  distributed  in  proportion 
to  certain  natural  qualities  inherent  in  the  human 
mind.  If  this  supposition  is  true,  it  might  naturally 
be  expected  that,  at  a  certain  stage  of  political  organ- 
ization, countries  of  similar  racial  characteristics 
would  show  similar  shapes  in  the  Lorenz  curves 
illustrating  the  division  of  property. 

Granting,  however,  that  this  hypothesis  is  correct, 
it  by  no  means  follows  that  there  is  a  natural  distri- 
bution of  wealth.  A  modification  of  the  laws  of  a 

1  Computed  from  Table  XVIII. 


THE  PEOPLE  OF  THE  UNITED  STATES 


FIGURE  8 


93 


A  COMPARISON  BY  LORENZ  CURVES  OF  THE  ESTIMATED  DISTRI- 
BUTION OF  WEALTH  IN  DIFFERENT  COUNTRIES 


TO         60          50          40          30          a)          10  0 

Percentage  of    Families, 
Beginning  with  the  Poorest 

nation  might  bring  into  being  a  division  of  riches  of 
a  radically  different  nature,  for  all  property  is  a  result 
of  law  and,  hence,  its  ownership  may  be  modified 
without  limit  if  the  ruling  class  so  desires. 

If  we  look  at  the  Lorenz  curve  for  England,  as 
shown  in  Figs.  8  and  9,  we  see  this  fact  forcefully 
called  to  our  attention.  The  less  equal  distribution 


94 


WEALTH  AND  INCOME  OF 


is  quite  striking — the  poor  are  relatively  mach  poorer 
and  the  rich  are  decidedly  richer  than  in  the  other 
countries.  Both  Great  Britain  and  Massachusetts 
are  manufacturing  nations;  their  people  are  racially 
similar;  in  most  respects  their  laws  and  customs  are 
much  alike;  why,  then,  this  difference  in  the  relative 
dispersion  of  wealth? 

FIGURE  9 

A  COMPARISON  BY  LORENZ  CURVES  OF  THE  DISTRIBUTION 
OF  WEALTH  AMONG  THE  RICHEST  FAMILIES  IN  VARIOUS 
COUNTRIES. 


Percentage  of  Families 
Beginning  with  the  Poorest 


The  answer  is  probably  to  be  found  in  the  laws  of 
inheritance.     The  English  system  of  primogeniture 


THE  PEOPLE  OF  THE  UNITED  STATES         95 

as  regards  landed  property  has  kept  the  bulk  of  the 
estates  intact  in  the  hands  of  the  oldest  son  with  the 
natural  result  that  there  has  been  a  tendency  for 
these  estates  to  increase  continuously.  In  Prussia, 
France,  and  Wisconsin,  all  the  children  have  shared 
more  or  less  equally  in  the  property  of  the  parent; 
hence,  estates  have  been  broken  up  and  there  has 
been  less  concentration  of  wealth.  If  this  presump- 
tion is  correct,  we  have  evidence  of  the  powerful 
influence  of  inheritance  laws  upon  wealth  distribution 
and  a  means  is  suggested  for  such  regulation  as  may 
be  deemed  desirable. 

Having  compared  the  general  distribution  of  wealth 
in  Wisconsin  with  that  in  European  countries,  the 
next  step  is  to  make  an  analysis  similar  to  that  used 
in  comparing  Wisconsin  and  Massachusetts.  We 
shall  again  divide  the  total  number  of  estates  into 
the  four  classes,  poor,  lower  middle,  upper  middle, 
and  rich.  The  percentages  for  each  nation  will  be 
identical  with  those  previously  used  in  the  two 
American  states,  but,  naturally,  the  average  wealth 
of  the  persons  in  similar  classes  will  differ  according 
to  the  country  of  residence.  Table  XX  brings  out  the 
principal  points  in  the  comparison.  Fig.  10  shows 
graphically  the  difference  in  the  shares  of  wealth 
possessed  by  identical  fractions  of  the  population  in 
the  various  countries. 

Again,  we  note  the  striking  dissimilarity  in  the 


96 


WEALTH  AND  INCOME  OF 


percentages  of  total  wealth  retained  respectively  by 
the  vast  majority  and  the  small  minority.  In  every 
instance,  the  richest  two  per  cent  of  the  people  own 
considerably  more  property  than  all  the  rest  of  the 
population.  In  England,  the  concentration  is  so 

TABLE  XX 


THE  MONEY  VALUE  OF  PROPERTY  OF  DIFFERENT  FRACTIONS 
OF  THE  POPULATION  IN  VARIOUS  COUNTRIES. 

Class  of 
Population. 

Country  and  Date. 

Percent^ 
age  of 
Total 
Wealth 
Owned 
by  Class. 

Average 
Value  of 
Estate  in 
Dollars. 

Money 
Value  of 
Estate 
Compared 
to  Wiscon- 
sin, 1900, 
as  a  Base. 

Poorest, 
65% 
of  the 
Population. 

Prussia  1908  

4.9 

4.3 
1.7 

5.2 

153 
186 
133 
381 

40 
49 
35 
100 

France  1909 
U.  Kingdom  1909  .  . 
Wisconsin  1900  .  .  . 

Lower  middle 
class, 
65%  to  80%. 

Prussia  1908  

5.5 
5.6 
2.9 

4.8 

743 
1,052 
979 
1,524 

49 
69 
64 
100 

France  1909  .... 

U.  Kingdom  1909  . 
Wisconsin  1900  .  .  . 

Upper  middle 
class, 
80%-98%. 

Prussia  1908  

30.6 
29.4 
23.7 
33.0 

3,445 
4,602 
6,670 
8,730 

39 
53 
76 
100 

France  1909.  . 

U.  Kingdom  1909  . 
Wisconsin  1900    .  . 

Richest, 

2%. 

Prussia  1908.    . 

59.0 
60.7 
71.7 
57.0 

59,779 
85,500 
181,610 
135,715 

44 
63 
134 
100 

France  1909.  . 

U.  Kingdom  1909  . 
Wisconsin  1900  .  .  . 

All 
classes. 

Prussia  1908  

100.0 
100.0 
100.0 
100.0 

2,026 
2,817 
5,067 
4,762 

42 
59 
106 
100 

France  1909  

U.  Kingdom  1909  . 
Wisconsin  1900  .  .  . 

THE  PEOPLE  OF  THE  UNITED  STATES 


97 


great  that  this  one-fiftieth  part  of  the  people  own 
nearly  three  times  as  much  as  the  poor  and  middle 
classes  combined.  In  fact,  the  titles  to  half  the 
property  of  the  United  Kingdom  are  apparently  in 

FIGURE  10 

FRACTIONS  OF  THE  TOTAL  WEALTH  BELONGING  TO  DIFFERENT 
CLASSES  OF  THE  POPULATION  IN  VARIOUS  COUNTRIES. 


Prussia-     1908 

• 

Poorest 

France  -    .1909 

• 

65 

Per  Cent 

U.Kinsdom-1909 

1 

of 

Population 

Wisconsin  1900 

- 

Prussia  -     1908 

•1 

Xower 

Middle 

France  -     1909 

m 

Class 

U.Ktngdom.1909 

• 

65-80 

Per  Cent 

Wisconsin  -1900 

- 

Prussia  -    1908 

^—I— 

"Upper 

France  -    1909  MM^HMMH 

Middle 

Class 

u.Ktngdom-1909  LMHMHHI 

80-98 

Per  Cent 

Wisconsin  -1900 

=—  —  . 

Ki  chest 
2 

Per  Cent 

0       .10       20       30       40       50       60       70      80 
Percentage  of  Total  Wealth 


98  WEALTH  AND  INCOME  OF 

the  hands  of  only  half  a  per  cent  of  the  population. 
While  this  degree  of  concentration  is  worse  than  in 
the  other  countries,  in  Prussia  and  France,  the  richest 
one  per  cent  of  the  owners  held  half  of  the  wealth  and, 
even  in  Wisconsin,  we  have  seen  that  half  the  wealth 
belonged  to  only  one-fiftieth  part  of  the  people. 

In  no  instance,  does  the  poorest  sixty-five  per  cent 
of  the  inhabitants  control  much  more  than  a  twentieth 
part  of  the  property  and,  in  the  United  Kingdom, 
they  possess  but  about  a  sixtieth  part  of  the  whole. 
Even  the  lower  middle  class  owns  but  a  trivial  frac- 
tion of  the  wealth,  varying  from  less  than  a  thirtieth 
of  the  whole  in  the  United  Kingdom  to  about  one- 
eighteenth  in  the  French  Republic.  For  all  practical 
purposes,  four-fifths  of  the  population  may  be  rightly 
pictured  as  being  forced  to  satisfy  themselves  with 
the  scraps  of  wealth  cast  aside  from  the  table  of 
Dives. 

A  more  accurate  picture  of  the  property  conditions 
of  the  various  classes  is  given  in  Fig.  11.  In  this 
illustration,  the  relative  wealth  is  represented  by 
cubes  whose  volumes  are,  in  each  case,  proportional  to 
the  money  values  of  the  holdings.  In  the  United 
Kingdom,  the  little  cube  representing  the  average 
wealth  of  almost  two-thirds  of  the  people  could  be 
removed  from  the  massive  cube  standing  for  the 
average  wealth  of  the  rich  without  causing  much 
more  than  a  nick  in  the  corner  and  the  same  would 


THE  PEOPLE  OF  THE  UNITED  STATES 


FIGURE  11 

RELATIVE    MONET  VALUE  OF  THE  PROPERTY   HELD  BY  THE 
AVERAGE  FAMILY  IN  EACH  FRACTION  OF  THE  POPULATION. 


Prussia 
1908 


fij 


France 
1909 


1900 


Wisconsin, 
1800 


Poorest         Lower 
65  Middle 

Bar,  Cent         Class 
66-80 
Eej-  Cent 


100  WEALTH  AND  INCOME  OF 

hold  true  to  a  slightly  iess  degree  in  each  of  the  other 
countries.  In  the  great  civilized  nations,  then, 
most  of  the  wealth  is  in  possession  of  one-fifth  of  the 
inhabitants  but  this  does  not  mean  that  the  benefits 
of  property  are  circumscribed  to  the  same  extent. 
Even  the  lower  middle  class  enjoys  to  a  considerable 
degree  the  first  advantage  of  wealth  ownership — viz. 
the  power  to  provide  against  emergency  and  disaster. 
They  also  receive  to  a  certain  extent,  the  second 
advantage  of  private  property — freedom  of  move- 
ment— but  this  only  accrues  in  full  measure  to  the 
upper  middle  class.  The  lower  middle  class  hold  to 
their  limited  possessions  with  even  greater  tenacity 
than  do  the  rich  to  theirs;  for,  as  a  man  grows  poorer, 
the  utility  of  a  dollar  increases  in  far  greater  ratio 
than  the  diminution  of  his  wealth.  As  a  result, 
even  the  small  property  possessed  by  the  lower  middle 
class  tends  to  render  its  members  stable  and  law- 
abiding  and  strongly  opposed  to  all  forms  of  anarchy 
and  violence.  Hence,  the  first  three  advantages  of 
private  property  from  the  social  standpoint  apply  to 
most  of  the  upper  third  of  the  population.  For  the 
lower  two-thirds,  all  of  these  are  absent.  Only  the 
fourth  advantage  of  private  property — the  stimulus 
to  wealth  accumulation — affects  the  poorest  two- 
thirds  of  the  people. 

Turning  to  the  private  standpoint,  we  see  that  only 
a  small    minority — the  upper  middle  class   and  the 


THE  PEOPLE  OF  THE  UNITED. STATES   101 

rich — possess  enough  property  to  derive  any  con- 
siderable income  therefrom  to  supplement  the  pro- 
ceeds of  their  toil. 

The  question  is  still  with  us:  "Is  this  a  satisfactory 
condition  of  affairs?"  There  seems  to  be  practically 
no  doubt  that  it  would  be  highly  desirable  for  a  far 
larger  amount  of  wealth  to  be  possessed  by  the  poor. 
But  wealth  does  not  come  by  wishing  and  the  supply 
is  very  clearly  limited.  Would  it  be  better  for  the 
nation  to  take  from  the  rich  and  give  to  the  poor? 
Would  this  result  in  the  poor  proceeding  to  squander 
the  accumulated  capital  of  years  in  a  brief  revel  of 
luxury  and  debauchery?  Would  the  scattered  wealth 
prove  ineffective  as  a  producing  power  and  so  reduce 
the  national  dividend  as  to  decidedly  increase  the 
poverty  of  the  very  classes  the  dispersion  was  ex- 
pected to  benefit?  l  Or,  on  the  other  hand,  could 
the  wealth  be  taken  from  the  rich  and  so  utilized  for 
the  benefit  of  the  poor  as  to  raise  their  standard  of 

1  Dr.  Richard  T.  Ely's  observations  on  his  recent  visit  to  New 
Zealand  led  him  to  believe  that  the  abundant  opportunities  open 
to  all  in  that  prosperous  region  had  tended  to  emphasize  the  dis- 
tinction between  the  active  and  the  passive  elements  of  the 
population.  The  chance  for  rapid  advancement  had  urged  the 
virile  on  to  more  strenuous  endeavors  but  the  same  opportunity 
for  ready  gains  had  made  the  easy-going  man  indolent  and  a  poor 
workman.  The  author  believes  that  the  same  phenomenon  has 
been  characteristic  of  the  American  frontier.  This  factor  must, 
then,  be  taken  into  consideration  in  deciding  whether  a  more 
equal  distribution  of  property  would  or  would  not  be  conducive 
to  greater  production  of  wealth. 


102  WEALTH  AND  INCOME  OF 

living,  decrease  the  birth  rate  among  them,  increase 
their  saving  power,  and  eventually  build  up  a  nobler 
and  better  democracy?  At  present,  evidence  appears 
to  be  too  scanty  to  render  possible  any  definite  answer 
to  these  questions  and  the  policy  which  one  advocates 
will  depend  on  the  way  he,  individually,  decides  upon 
these  propositions. 

It  should,  however,  be  emphasized  that  wealth 
distribution  is  the  result  of  law  and  hence  may  be 
modified  in  any  way  that  the  majority  of  the  voters 
deem  best.  We  have  seen  that,  in  Great  Britain, 
the  law  of  primogeniture  has  apparently  been  re- 
sponsible for  greater  concentration  than  exists  in 
other  nations  in  which  property  is  more  equally 
divided  among  the  heirs.  If  wealth  can  be  concen- 
trated by  law,  it  might  equally  be  dispersed  by  law. 
For  example,  an  inheritance  tax  might  be  used  to 
confiscate  or  greatly  reduce  large  bequests  and 
inheritances  and,  if  this  were  done,  the  tendency  to 
gather  together  wealth  into  great  aggregations  would 
be  decidedly  less  than  at  present.  It  would  also  be 
feasible  to  limit  greatly,  by  law,  the  various  oppor- 
tunities for  wealth  to  gain  wealth.  Limitations  might 
be  placed  on  investments  in  things  that  have  proved 
particularly  profitable  to  the  man  of  large  means,  for 
example,  public  utilities,  manufacturing  plants,  city 
real  estate,  etc.  Speculative  manipulation  and  the 
typical  methods  of  the  promoters  of  high  finance 


THE  PEOPLE  OF  THE  UNITED  STATES   103 

might  be  prohibited  or  curtailed.  In  fact,  in  a 
hundred  ways,  legislation  might  be  used  to  secure 
greater  equality  of  possessions.  If  we  deem  the 
present  gross  inequality  decidedly  evil,  then  remedial 
legislation  can  be  enacted  none  too  soon.1 

AVERAGE  WEALTH 

One  more  point  should  be  noted  before  we  leave 
the  comparison  of  the  wealth  of  different  nations; 
that  is  the  relative  average  wealth  of  the  people  in 
different  countries.  In  this  connection,  all  figures 
have  been  based  on  money  values.  No  attempt  has 
been  made  to  compare  the  purchasing  power  of  money 
in  different  nations  but  the  investigations  of  the 
British  Board  of  Trade  do  not  show  this  to  be  at  all 
radically  different.  In  fact,  with  comparatively 
easy  exchange  of  money  and  goods  between  nations, 
large  differences  can  only  exist  in  those  commodities 
which  are  practically  non-transportable  or  are  guarded 
by  high  tariff  duties.  Since  tariff  duties  are  mutual, 
the  net  differences  resulting  therefrom  are  probably 
small.  It  seems  likely,  therefore,  that  the  differences 
in  the  purchasing  power  of  a  dollar  are  not  great 
enough  to  affect  in  any  vital  way  the  validity  of  the 
main  conclusions  derived.  The  wealth  of  each  class 
in  Wisconsin  has  been  taken  as  100.  In  the  last 

1  For  many  of  the  preceding  ideas  as  to  the  relationship  between 
law  and  the  distribution  of  wealth  the  author  acknowledges  his 
indebtedness  to  Dr.  R.  T.  Ely's  work  on  Property  and  Contract. 


104 


WEALTH  AND  INCOME  OF 


column  of  Table  XX,  the  other  nations  are  compared 
therewith.  The  results  are  shown  graphically  in 
Fig.  12. 

FIGURE    12 

A  COMPARISON  FOR  IDENTICAL  FRACTIONS  OF  THE  POPU- 
LATION OF  VARIOUS  COUNTRIES  OF  THE  AVERAGE  MONEY 
VALUE  OF  PROPERTY  PER  FAMILY  RELATIVE  TO  THAT  OF  FAM- 
ILIES COMPRISING  THE  SAME  FRACTION  OF  THE  WISCONSIN  POPU- 
LATION IN  1900.1 


Prussia  1908 

France  1909 

U.  Kingdom      1909 


Wisconsin 


1900 


Prussia  1908 

France  1909 

U.  Kingdom  1909 

Wisconsin  1900 


Upper 
Middle  Class 

80-98 
Per.Cent 


Prussia  1908 

France  1909 

U.  Kingdom       1909 


Wisconsin 


1900 


Richest 

2 
Per  Cent 


Prussia  1908 

Prance  1909 

U.  Kingdom  1909 

Wisconsin  1900 


All  Classes 


Prussia  1908 

France  1909 

U.  Kingdom  1909 

Wisconsin  1900 


0        25       50        75      100 

Index 
Li-Money  value  of  property  of  each  class  in  Wisconsin  =JOO 


125 


THE  PEOPLE  OF  THE  UNITED  STATES   105 

That  wealth  distribution  is  not  at  all  closely  con- 
nected with  wealth  per  capita  is  brought  out  by  the  re- 
lation existing  between  conditions  in  France,  Prussia, 
and  Wisconsin.  While,  in  all  three  countries,  the 
relative  shares  of  like  fractions  of  the  population  are 
similar,  there  is  a  marked  discrepancy  between  the 
average  wealth  per  inhabitant  in  the  different  regions. 
The  United  Kingdom  is  the  wealthiest  nation  of  all, 
a  fact  which  lends  support  to  the  theory  that  unequal 
distribution  tends  to  saving  and  hence  wealth  accu- 
mulation. This  idea  is  further  reinforced  by  the 
knowledge  that  the  average  income  of  the  inhabitant 
of  the  British  Isles  is  undoubtedly  materially  less 
than  that  of  the  average  person  in  Wisconsin. 

Despite  the  fact,  however,  of  the  high  average 
wealth,  the  masses  of  the  people  in  the  United  King- 
dom are  poorer  than  the  same  classes  in  the  other 
nations  studied,  possessing  little  more  than  a  third 
as  much  property  as  the  like  fraction  of  the  people 
of  Wisconsin.  In  every  class  except  the  British 
rich,  Wisconsin  has  a  long  lead  in  per  capita  wealth. 
This  suggests  the  greater  ease  of  wealth  accumulation 
in  a  new  country  possessing  abundant  resources  and 
we  shall  later  see  that  the  income  obtainable  in  such 
regions  is  so  much  larger  as  to  render  it  far  easier 
to  accumulate  property.  Of  the  nations  studied,  the 
statistics  show  that,  on  the  whole,  Prussia  is  the 
poorest  nation  with  France  not  much  better  off. 


CHAPTER  V 
INCOME  DEFINED 

IN  an  earlier  chapter,  we  discussed  the  various 
ideas  concerning  wealth.  Now  wealth  and  income 
are  so  closely  related  that  great  difficulty  has  been 
experienced  by  most  writers  on  economics  in  keeping 
the  ideas  distinct.  Income  usually  is  held  to  consist 
of  wealth  and  wealth  is  nearly  always  the  result  of 
income.  In  just  what  way,  then,  do  the  two  con- 
cepts differ? 

The  one  fundamental  distinction  is  that  income 
always  represents  a  flow  and  not  an  accumulation 
and  a  flow  can  never  be  measured  unless  time  is 
taken  into  consideration.  Income,  therefore,  must 
invariably  be  measured  as  a  given  amount  during  a 
definite  period  of  time. 

The  term  income  is  applied  to  flows  differing  widely 
in  nature  and  quality.  A  workman's  wages,  interest 
on  loans,  the  rent  of  land,  and  the  profits  of  a  business 
man  are  all  classified  as  income.  A  man  is  said  to 
receive  income  through  gifts  or  inheritance,  through  a 
rise  in  the  value  of  property  in  his  possession,  through 
winnings  from  lotteries  or  gambling,  or  from  the  sale 
of  products  which  he  himself  manufactures  or  pro- 
duces from  the  soil.  In  recent  years,  most  econo- 

106 


THE  PEOPLE  OF  THE  UNITED  STATES   107 

mists  have  added  to  the  income  list  those  pleasures 
which  a  person  receives  from  the  use  of  free  goods. 
A  man  enjoys  a  beautiful  sunset.  Does  he  not 
receive  income  as  truly  as  the  man  who  enjoys  the 
Oriental  rug  in  his  home?  One  is  free  and  the  other 
costs  money  but  both  alike  appeal  to  the  man's  sense 
of  beauty. 

When  the  statistician  undertakes  to  measure  in- 
comes, he  quickly  discovers  that  he  cannot  apply  the 
same  yardstick  to  each  of  the  varieties  above  de- 
scribed. The  commonest  method  of  income  measure- 
ment is  to  use  money  units  as  denominators.  We 
say  that  a  man  earned  or  "made"  two  thousand 
dollars  last  year  but  we  do  not  mean  that  he  actually 
received  this  amount  in  money.  As  a  matter  of  fact, 
under  modern  business  conditions,  but  a  small  frac- 
tion of  the  amount  would  normally  be  obtained  in 
coin  or  currency.  Most  transactions  of  moment  are 
made  through  the  use  of  bank  credit  exchanged  by 
means  of  checks  and  drafts.  A  large  share  of  the 
two  thousand  dollars  may  merely  represent  apprecia- 
tion in  the  money  value  of  land  or  other  property 
held  as  an  investment.  When  we  speak  of  money 
income,  therefore,  we  do  not  mean  income  in  money 
but  rather  income  measured  in  terms  of  money. 

Of  recent  years,  bondholders  and  other  creditors 
have  discovered  that  income  measured  in  terms  of 
money  may  be  only  a  phantom  of  the  imagination. 


108  WEALTH  AND  INCOME  OF 

The  man  buying  a  two  per  cent  United  States  bond 
in  1896  and  allowing  the  interest  to  accumulate  to 
the  present  time  would  find  that  the  principal  and 
all  the  interest  compounded  for  the  eighteen  years 
would  not  buy  back  as  many  commodities  or  as 
good  a  piece  of  real  estate  as  he  exchanged  for  the 
bond  nearly  a  score  of  years  ago.  Money  has  de- 
preciated and  the  money  value  of  commodities  in 
general  has  increased  more  than  the  two  per  cent 
each  year  which  the  bond  returns  as  interest.  The 
interest,  therefore,  has  been  nominal  and  not  real. 
This  shows  us,  then,  clearly,  that  money  income  is 
something  far  less  tangible  than  the  business  man 
usually  believes.  Sometimes  a  dollar  gained  means 
one  thing,  sometimes  another.  The  workingman 
realizes  this  fact  when  he  discovers  that,  though  his 
wages  have  risen,  the  prices  of  food  and  fuel  and  the 
rent  of  his  house  have  risen  even  more  rapidly. 

Since,  then,  the  term  income  is  used  to  cover  such 
diverse  ideas,  it  is  necessary  to  apply  modifying 
adjectives  to  the  word  and  separate  the  meanings 
into  logical  classes.  The  following  three  varieties 
are  probably  the  most  important  kinds  of  income. 

I.  BOOK  INCOME   (commonly  known  as  money  in- 
come) . 

This  equals  the  value  in  money  of  the  net  receipts 
or  gain,  as  shown  by  an  accounting  system,  accruing, 


THE  PEOPLE  OF  THE  UNITED  STATES   109 

during  a  given  period  of  time,  to  an  individual,  a 
family,  or  a  business  concern,  from  personal  services, 
investments,  or  business  transactions. 

This  is  purely  a  business  concept.  A  man's  book 
income  is  not  immediately  affected  by  the  use  to 
which  he  puts  it.  He  may  consume  it,  give  it  away, 
invest  it,  or  destroy  it  and  the  amount  of  the  income 
is  unchanged.  Book  income  is  an  accounting  con- 
cept, yet  a  man  may  have  a  book  income  who  does 
not  know  how  to  keep  accounts.  An  agricultural 
laborer's  book  income  might  appear  something  like 
this,  if  correctly  stated. 

Wages,  $30  per  mo.  for  9  mos $270 

Board,  room,  and  washing  furnished  by  employer 180 

Profit  on  horse-trade 10 

Increase  in  value  of  town  lot 30 

Total  receipts $490 

Interest  on  mortgage  on  lot 20 

Net  book  income $470 

Observe  that  his  board  during  the  winter,  which 
he  pays  for  at  the  restaurant  in  the  village,  is  not 
included  in  his  book  income.  This  is  purchased  with 
money  already  accounted  for. 

The  measurement  of  income  received  for  personal 
services  is  more  simple  than  the  ascertainment  of  the 
income  from  investments.  A  man's  savings  may  be 
hoarded  away  or  they  may  be  invested  in  bank  credit, 
securities,  lands,  factories,  office  buildings,  a  home, 


110  WEALTH  AND  INCOME  OF 

a  motor  car,  furniture,  clothing,  food,  or  drink.  In 
the  first  case,  it  is  evident  that  no  money  income 
accrues  except  in  those  instances  in  which  the  hoarded 
articles  increase  in  money  value.  Hoarded  standard 
money  could  never  yield  a  money  income.  It  is 
equally  clear  that  investments  in  securities,  lands,  and 
factories  normally  yield  a  money  income.  How  is 
such  an  income  computed?  The  following  example 
is  typical. 

Value  of  building  at  close  of  year $3,000 

Rent  received  during  year 300 

Total $3,300 

Value  of  building  at  beginning  of  year $3,070 

Repairs,  insurance,  taxes,  etc 50 

Total $3,120 

Net  money  income  for  year $    180 

The  above  example  applies  to  a  business  building; 
why  is  it  not  equally  applicable  to  the  residence 
occupied  by  its  owner?  Evidently,  if  the  man  has 
saved  $3,000,  he  has  the  option  of  buying  a  residence 
or  investing  in  a  business  building  and  using  the 
income  derived  therefrom  to  pay  rent  on  a  residence. 
In  both  cases,  the  net  results  are  about  the  same — 
the  $3,000  furnishes  a  habitation  in  which  its  owner 
may  live  and,  the  use  of  the  house  being  worth  money, 
this  must  be  regarded  as  a  form  of  money  income. 

But,  if  this  reasoning  applies  to  a  house,  is  there 
any  reason  why  it  will  not  apply  with  equal 


THE  PEOPLE  OF  THE  UNITED  STATES   111 

force  to  the  use  of  a  motor  car,  or  even  to  the  use  of 
the  coat  which  a  man  wears?  Logically,  there  seems 
to  be  little  distinction.  If,  by  the  same  method  of 
computation  used  for  the  building,  a  surplus  appears, 
then,  that  surplus  is  just  as  truly  a  part  of  the  money 
income  of  the  owner  as  was  the  net  balance  in  the 
example  cited.  However,  in  most  minor  articles  of 
consumption,  the  life  of  usefulness  is  so  limited  that 
the  value  of  the  services  rendered  is  but  little  greater 
than  the  depreciation  during  the  period  used  as  a 
unit,  the  result  being  that  the  net  money  income 
becomes  a  negligible  factor.  We  do  not,  therefore, 
ordinarily  include  the  interest  on  the  cost  of  the 
clothing  and  groceries  on  hand  as  part  of  the  money 
income  of  the  private  family.  On  the  other  hand,  we 
find  that  most  men  consider  an  investment  in  a  house 
and  lot  a  very  different  matter  from  an  expenditure 
for  a  suit  of  clothes  or  a  phonograph.  In  the  purchase 
of  the  home,  its  selling  possibilities  are  usually  an 
important  consideration.  Men  think  of  the  likeli- 
hood of  disposing  of  it  later  at  an  advance,  of  the  rent 
saved,  of  car-fare  added  or  eliminated.  The  money 
spent  for  a  residence  is  regarded,  therefore,  as  an 
investment  of  a  semi-business  nature;  while  the 
purchaser  of  a  book-case  or  a  carpet  for  home  use 
rarely  seriously  considers  the  selling  value  of  these 
articles.  Besides,  a  large  fraction  of  the  population 
do  not  own  but  rent  their  homes  while  but  few  rent 


112  WEALTH  AND  INCOME  OF 

their  furniture  and  personal  belongings.  There  is, 
therefore,  much  to  be  said  in  favor  of  including  in 
money  income  the  net  value  of  the  services  rendered 
by  very  durable  consumption  goods  like  houses  and, 
at  the  same  time,  excluding  from  consideration  less 
durable  articles  such  as  furniture,  food,  and  clothing. 
This  is  the  course  required  by  law  in  the  assessment 
of  incomes  for  taxation  in  the  state  of  Wisconsin. 

The  preceding  discussion  has  served  to  point  out 
the  fact  that  the  concept  of  book  or  money  income  is 
far  less  simple  than  it  appears  at  first  thought.  It  has 
also  been  shown  that  while  book  income  is  always 
measured  in  terms  of  money,  the  purchasing  power  of 
money  varies,  hence,  a  thousand  dollars  of  book 
income  may  render  vastly  different  service  at  one 
given  period  than  the  same  number  of  dollars  at  a 
different  period.  For  example,  prices  have  risen 
greatly  in  the  last  decade,  and  the  man  with  a  fixed 
salary  of  one  hundred  dollars  a  month  finds  his 
purchasing  power  steadily  being  curtailed.  This 
fact  has  given  rise  to  a  demand  for  some  measure  of 
income  which  will,  as  far  as  possible,  eliminate  results 
of  value  fluctuations  in  the  medium  of  exchange. 
To  accomplish  this  end,  index  numbers  have  been 
constructed  which  are  intended  to  measure  the  price 
changes  in  commodities;  actual  book  incomes  have 
been  divided  by  these  index  numbers;  and  the  results 
have  been  used  to  compare  the  net  loss  or  gain  in 


THE  PEOPLE  OF  THE  UNITED  STATES        113 

purchasing  power  experienced  by  the  individual 
income.  This  attempt  to  substitute  the  value  of 
many  commodities  for  that  of  money  leads  to  the 
consideration  of  the  concept  of  commodity  income, 
or  income  in  purchasing  power,  which  may  be  defined 
thus. 

II.  INCOME  IN  PURCHASING  POWER. 

This  consists  of  the  net  increase  in  the  power  to 
obtain  commodities  or  property,  which  accrues  to  an 
individual,  a  family,  or  a  business  concern  during  a 
given  period  of  time. 

In  many  instances,  this  practically  amounts  to  a 
conversion  of  the  book  income  into  commodities. 
There  is,  however,  one  important  exception  to  this 
rule.  It  arises  from  the  fact  that  book  income  includes 
the  increase  in  value  of  assets  held  during  a  period 
of  time.  Thus,  if  a  man  buys  a  piece  of  land  for 
$1,000  and  sells  it  two  years  later  for  $1,500,  he 
would  consider  that  he  had  gained  a  profit  of  $500. 
If,  however,  an  inflation  of  the  currency  had  caused 
other  prices  to  double  in  the  interval,  he  had  really 
sustained  a  net  loss  in  his  ability  to  purchase  com- 
modities. The  land  had  risen  in  value  in  respect  to 
money  but  had  fallen  in  value  as  compared  to  other 
goods.  Such  fictitious  gains  in  assets  may  not,  there- 
fore, be  legitimately  included  under  the  head  of 
income  in  purchasing  power. 
9 


WEALTH  AND  INCOME  OF 

Book  income  arising  from  wages,  interest,  or  rent 
received,  or  from  profits  gained  in  mercantile  or 
manufacturing  operations,  or  from  any  other  sources 
than  increases  in  the  market  prices  of  assets,  may  be 
legitimately  converted  into  terms  of  purchasing 
power  through  division  by  the  correct  price  index. 
If  a  family's  book  income  is  $900  this  year  as  com- 
pared to  $800  last  year,  but  if  $900  will,  this  year, 
buy  only  as  many  commodities  as  could  have  been 
purchased  last  year  with  $750,  then  the  income  in 
purchasing  power  has  evidently  decreased  and,  from 
the  economic  standpoint,  the  welfare  of  the  family 
has  diminished.  The  amount  of  the  purchasing 
power  income  is,  therefore,  of  more  importance  to 
the  recipient  than  the  nominal  figures  shown  on  the 
books.  This  fact  is  generally  recognized  and  hence 
the  appellation  real  income  has  often  been  erroneously 
applied  to  this  concept.  However,  real  income  is 
something  materially  different  in  nature  as  the  fol- 
lowing definition  will  help  to  make  clear. 

III.  REAL  INCOME  (or  psychic  income). 

Real  or  psychic  income  is  made  up  of  the  amount 
of  gratifications  yielded  by  consumption  of  goods  to 
an  individual  during  a  given  period  of  time. 

One  observes  that  real  income  can  accrue  to  an 
individual  only,  never  to  a  group  or  organization 
except  in  an  indirect  way.  The  same  amount  of 


THE  PEOPLE  OF  THE  UNITED  STATES   115 

book  income  gives  practically  equal  purchasing  power 
to  all  persons  in  a  given  location  at  a  given  time  but 
two  men  may  sit  side  by  side,  at  a  concert,  each  paying 
two  dollars  for  his  seat;  one  may  derive  a  great  amount 
of  pleasure  from  the  performance,  the  other  may  go 
away  bored.  A  motor  ride  may  be  a  great  treat  to 
the  poor  child  but  extremely  tiresome  to  the  pro- 
fessional chauffeur.  A  dollar,  in  general,  gives  far 
less  service  to  the  very  rich  than  to  the  very  poor. 
We  see,  therefore,  that  book  income  and  purchasing 
power  income  are,  primarily,  objective  ideas  while 
real  income  is,  primarily,  subjective  in  its  nature. 

It  has  been  held  by  some  writers  that  this  definition 
of  real  income  is  too  abstract  and  indefinite  to  be 
within  the  comprehension  of  most  people.  As  a 
matter  of  fact,  however,  the  ideas  of  book  income  and 
commodity  income  are  decidedly  more  abstract  than 
is  this  concept.  The  owner  of  a  city  home  learns 
from  the  tax  assessor's  report  and  from  current  gossip 
that  the  selling  value  or  the  rental  value  of  his  prop- 
erty is  increasing  and,  therefore,  he  is  asked  to  pay 
more  taxes.  True,  the  house  seems  to  be  getting 
older  and  more  in  need  of  repairs,  the  trees  are  be- 
coming scraggly  and  the  lawn  looks  no  better  than 
in  former  years,  yet,  in  some  way,  he  is  supposed  to 
be  attaining  income  through  the  rise  in  value.  If  he 
wishes  to  sell  and  move  elsewhere,  he  finds  that 
other  houses  have  similarly  increased  in  price  and  he 


116  WEALTH  AND  INCOME  OF 

cannot  improve  his  condition  by  moving.  His  in- 
come received  from  the  rising  land  value  is,  therefore, 
not  only  abstract  but  highly  unreal. 

Or  let  us  suppose  the  case  of  a  friendless  man  who 
by  great  care  and  self  denial  has  succeeded  in  laying 
by  five  thousand  dollars  for  his  old  age  but  dies  before 
he  has  spent  a  dollar  of  the  fund.  To  class  this  five 
thousand  dollars  as  part  of  the  income  gained  during 
his  lifetime  is  of  very  doubtful  validity.  Aside  from 
interest  received,  which  appears  in  his  annual  income 
account,  the  only  benefit  which  he  has  derived  has 
been  the  added  feeling  of  security  experienced  by 
having  the  money  in  the  bank  but  he  expected  not 
only  this  satisfaction  but  also  that  he  would  derive 
much  enjoyment  from  the  goods  purchased  with  the 
money.  This  part  of  his  anticipated  income  never 
materialized  and  it,  to  most  normal  men,  would  be 
the  most  important  part.  The  major  part  of  the 
real  income  is  likely  to  accrue  to  the  heir  for  he 
benefits  from  the  money.  It  seems,  therefore,  far 
more  logical  to  speak  of  income  as  the  effect  upon 
the  individual  consciousness  and  to  locate  the  time 
of  income  at  the  date  when  gratifications  are  received. 
Real  income,  therefore,  is  derived  only  in  slight 
degree  during  the  saving  process  but  in  full  measure 
when  the  savings  are  expended. 

The  obvious  conclusion  seems  to  be  that  psychic 
income  is  a  much  more  real  and  definite  thing  than 


THE  PEOPLE  OF  THE  UNITED  STATES   117 

either  book  income  or  commodity  income.  Were  it, 
therefore,  readily  commensurable,  it  would  be  by  far 
the  most  desirable  basis  for  comparison.  Unfortu- 
nately, it  is  not  easy  to  measure.  Units  of  pleasure 
received  or  pain  averted  are  recorded  in  no  way 
available  for  use  by  the  statistician.  Much  real 
income  arises  from  the  use  of  free  or  public  goods. 
How  much  of  this  account  should  be  debited  to 
individual  A  or  to  individual  B?  We  cannot  even 
obtain  from  our  particular  friends  a  fairly  accurate 
estimate  of  their  real  income  from  free  goods.  Evi- 
dently, we  cannot  hope  to  record  and  tabulate  such 
data  for  the  nation  as  a  whole.  Practically,  there- 
fore, we  must,  in  a  statistical  inquiry,  consider  only 
income  in  the  form  of  economic  goods  and  the  pre- 
liminary measurement  of  such  income  cannot  be 
made  in  units  of  gratification  received  but  must  be 
computed  in  money  value.  This  method  is,  ad- 
mittedly, far  from  ideal  but  it  is  the  best  available. 

Fortunately,  the  error  involved  is  not  likely  to 
nullify  the  worth  of  the  inquiry.  The  fraction  of 
income  received  by  most  people  from  free  goods  is, 
after  all,  a  minor  share  and  does  not  rapidly  vary. 
Although  a  dollar  is  of  more  importance  to  the  poor 
than  to  the  rich  man,  yet,  in  a  qualitative  way,  the 
incomes  of  the  two  are  fairly  comparable  when 
measured  in  money.  The  man  with  a  salary  of  four 
thousand  dollars  a  year  ordinarily  receives  less  than 


118  WEALTH  AND  INCOME  OF 

twice  the  real  income  of  the  man  with  a  salary  of 
two  thousand  dollars,  for  the  first  two  thousand 
dollars  is  used  to  satisfy  the  more  urgent  wants,  but, 
nevertheless,  he  receives  a  larger  real  income.  Fur- 
thermore, in  the  case  of  the  most  important  com- 
parison, that  in  respect  to  time,  we  are  aided  by  the 
fact,  shown  in  the  last  chapter,  that  wealth  distri- 
bution in  the  United  States  has  remained  fairly 
constant  for  several  decades.  Human  nature  changes 
but  slowly.  As  a  result,  to  the  average  individual, 
at  the  same  or  different  dates,  two  hats  are  likely  to 
give  more  satisfaction  than  one  of  like  quality,  two 
pounds  of  candy  ordinarily  yield  more  pleasure  than 
one  pound,  and  society  is  made  up  of  individuals, 
the  majority  of  whom  do  not  vary  greatly  from  the 
average.  A  record,  therefore,  of  the  quantities  of 
commodities  actually  consumed  furnishes  a  reason- 
ably good  relative  gauge  by  which  to  measure  the 
real  income  derived  from  economic  goods.  We  are 
primarily  interested  in  comparing  incomes  at  different 
dates  rather  than  in  determining  the  absolute  income 
at  a  given  time  and,  for  the  above  reasons,  the 
income  in  purchasing  power  furnishes  a  fairly  good 
criterion  of  changes  in  real  income. 

Since  incomes  are  necessarily  computed  on  a  money 
basis,  we  shall  first,  in  every  case,  attempt  to  apply 
this  standard.  The  next  step  is  to  reduce  these  book 
incomes,  whenever  possible,  to  a  basis  of  purchasing 


THE  PEOPLE  OF  THE  UNITED  STATES   119 

power.  In  most  instances,  this  can  oe  done  with  a 
reasonable  degree  of  success.  It  would  be  desirable 
to  complete  the  process  by  transforming  the  pur- 
chasing power  income  in  each  instance  into  real 
income  but,  since  this  is  impracticable,  we  must  con- 
tent ourselves  with  ascertaining  book  incomes  or 
incomes  in  purchasing  power.  As  noted  above, 
changes  of  considerable  amount  in  the  last  named 
will  probably  be  reasonably  good  indicators  of  the 
change  in  the  economic  well  being  of  the  income 
receivers. 

Having  thus  briefly  examined  into  the  nature  of 
the  income  problem,  we  are  now  ready  to  proceed 
with  an  inquiry  concerning  the  incomes  of  various 
classes  of  the  people  of  the  United  States. 

We  have  now  considered  the  characteristics  of  in- 
come as  dealt  with  from  the  standpoint  of  the  indi- 
vidual recipients.  These  individuals  compose  society 
and  society  is  divided  by  geographical  lines  into 
districts,  counties,  states,  provinces,  nations,  etc. 
This  book  deals,  primarily,  with  only  one  nation, 
the  United  States  of  America,  and  the  aim  is  to  esti- 
mate and  analyze  the  total  income  which  is  received 
by  the  people  of  this  country  as  a  whole.  The 
difficulties  of  measuring  total  real  income  are  insur- 
mountable, hence,  the  study  will  be  confined  to  an 
attempt  to  approximate  the  aggregate  amount  of 
economic  goods  consumed,  constituting  what  is 


120  WEALTH  AND  INCOME  OF 

commonly  referred  to  as  the  national  dividend,  and 
to  estimate  the  total  quantity  of  goods  produced  by 
the  efforts  of  the  people,  an  aggregate  which  we 
shall  designate  as  the  national  income,  and  to  classify 
this  total  according  to  the  industries  and  factors  of 
production  participating  in  its  creation.  The  national 
dividend,  to  speak  with  accuracy,  consists  wholly  of 
valuable  services  of  persons  or  things.  Our  national 
well  being  is  measured  by  the  amount  of  free  or  valu- 
able services  at  our  command.  Most  of  us  receive,  to 
some  extent,  direct  services  of  other  human  beings. 
Waiters  bring  us  our  food;  our  shoes  are  polished  by 
boot  blacks;  we  are  entertained  by  actors;  our  physi- 
cal ailments  are  treated  by  physicians;  lawyers  aid 
us  with  legal  advice ;  and  we  are  instructed  by  teachers 
and  clergymen.  But  the  majority  of  people  receive 
only  a  minor  part  of  their  income  in  the  form  of 
personal  services.  A  larger  fraction  is  made  up  of  the 
services  of  commodities.  Our  homes  serve  to  shelter 
us  from  the  severity  of  heat,  cold,  and  storm;  our 
clothing  serves  us  by  tempering  the  unpleasant  effects 
of  sun  and  frost  and  wind  as  well  as  by  catering  to 
our  vanity.  Our  food  tickles  our  palates  and  re- 
plenishes our  energies.  All  the  gratifications,  then, 
which  compose  our  real  incomes  are  afforded  by  the 
direct  services  of  either  persons  or  things.  If  the 
services  of  free  goods  are  omitted  and  all  other 
services  are  added  together,  they  constitute  the 


THE  PEOPLE  OF  THE  UNITED  STATES   121 

national  dividend.  But,  quantities  of  services,  like 
quantities  of  gratifications,  are  difficult  to  measure 
and  record.  When  we  desire  a  small  article,  we 
usually  buy  the  article  itself  rather  than  its  separate 
services.  On  the  other  hand,  when  dealing  with 
commodities  of  greater  cost,  we  often  invest  in  their 
services  only.  We  do  not  purchase  a  street  car  line 
in  order  to  enjoy  the  service  of  a  street  car — we  pur- 
chase the  service  as  we  desire  it;  we  often  rent  a  house 
in  which  to  live  and  even  a  piano  by  which  to  be 
entertained.  In  these  cases,  we  receive  the  temporary 
services  only,  the  title  to  the  commodity,  and  hence 
its  remaining  services,  resting  in  some  other  person. 
When  a  thing  is  bought  outright,  we  capitalize,  or 
roughly  compute,  the  present  worth  to  us  of  all  the 
services  which  we  expect  the  commodity  to  yield  in 
the  future.  A  dish  of  ice-cream  renders  brief  service 
and  disappears.  The  value  of  the  service  which  it 
gives  during  the  ten  minutes  in  which  it  is  being  con- 
sumed is  practically  identical  with  the  value  of  the 
ice-cream  itself.  This  is  an  example  of  a  very 
perishable  article  and  perishable  goods  soon  fail  to 
give  further  benefit  to  the  owner.  On  the  other  hand, 
one  might  be  willing  to  pay  only  a  dollar  for  the  use 
of  a  piano  for  one  evening  and  yet  buy  it  outright  at  a 
price  of  three  hundred  dollars,  for  the  buyer  expects 
it  to  render  services  for  years  and,  hence,  the  values 
of  these  individual  services  are  discounted  back  to 


122  WEALTH  AND  INCOME  OF 

the  present  time  and  combined;  the  sum,  which  is  the 
value  to  the  purchaser,  being  at  least  equal  to  the 
price  which  he  pays  for  the  instrument. 

When,  therefore,  a  good  is  bought  for  purposes  of 
consumption,  the  real  thing  purchased  is  a  bundle  of 
anticipated  services.  If  the  calculation  is  correct, 
the  price  paid  for  the  article  is  likely  to  be  approxi- 
mately the  present  worth  of  all  the  future  services. 
Since  most  consumable  commodities  are  not  very 
lasting,  the  larger  share  being  used  up  within  a  year 
or  two,  if  we  know  the  value  of  the  consumable  com- 
modities reaching  the  consumers  of  a  nation  during  a 
year,  we  have  an  approximation  to  the  value  of  the 
services  received  or,  in  other  words,  to  the  value  of 
the  national  dividend.  It  is,  then,  possible,  through 
changes  in  the  supply  of  commodities  and  personal 
services  to  measure  changes  in  the  national  dividend. 

The  total  value  of  the  national  dividend  differs 
materially  from  the  national  income,  the  latter  being 
considered  as  the  sum  total  of  the  book  incomes  of 
the  inhabitants  of  a  nation.  The  difference  is  of 
about  the  same  nature  as  that  existing  between  the 
net  gain  of  a  corporation  and  the  dividends  paid. 
The  profits  of  the  corporation  for  the  year  might 
be  one  million  dollars  but  the  directors  might  deem 
it  advisable  to  lay  aside  half  of  the  amount  for 
expanding  the  business  and  only  pay  out  half  a  million 
dollars  in  dividends.  In  the  United  States,  every 


THE  PEOPLE  OF  THE  UNITED  STATES   123 

income  receiver  is,  to  a  limited  extent,  a  director 
when  it  comes  to  disposing  of  the  national  income. 
Each  person  may  decide  to  lay  aside  a  fraction  of  his 
income  or  he  may  spend  the  entire  amount  for  current 
needs.  Those  who  save  increase,  directly  or  in- 
directly, the  capital  supply  or  productive  equipment 
of  the  nation.  The  part  of  the  national  income 
included  in  their  savings  does  not,  in  any  sense,  form 
a  part  of  the  national  dividend  for  the  current  year 
any  more  than  does  the  amount  invested  by  a  cor- 
poration for  improvements  constitute  dividends  for 
the  stockholders.  Savings  or  investments  are  in- 
tended to  enlarge  the  dividends  of  future  years.  The 
yearly  savings  of  the  people  of  the  United  States 
constitute  a  very  considerable  sum  as  is  evidenced 
by  the  rapid  growth  in  the  capital  supply  of  the 
country.  If  this  large  sum  of  total  savings  were 
subtracted  from  the  total  book  or  money  income  of 
the  people,  the  remainder  should  be  approximately 
equal  to  the  value  of  the  national  dividend. 


CHAPTER  VI 

THE  NATIONAL  INCOME  AND  THE  INDUSTRIES 
THAT  PRODUCE  IT 

THE  NATIONAL  INCOME 

FROM  our  farms  and  forests,  out  of  our  mines  and 
rivers  and  lakes,  from  our  shops  and  factories,  and 
from  our  theatres,  our  schools,  and  our  churches 
flows  forth  a  constant  stream  of  finished  commodities 
and  services  ready  for  consumption  by  the  people. 
It  is  the  result  of  natural  forces  and  materials  being 
utilized  or  acted  upon  by  man's  efforts.  It  includes 
the  final  products  of  the  capitalistic  processes  of 
industry.  From  this  stream,  if  at  all,  the  wants  of 
all  the  people  must  be  satisfied.  It  is  to  the  en- 
larging of  this  stream  that  the  energies  of  the  nation 
are  primarily  directed. 

In  addition  to  this  stream,  whose  annual  flow  con- 
stitutes the  national  dividend,  there  is  produced,  each 
year,  a  quantity  of  new  capital  goods,  much  greater 
than  that  used  up  by  the  industrial  processes.  This 
additional  capital  represents  the  savings  of  the  nation. 
These  savings,  together  with  the  national  dividend, 
constitute  the  national  income — the  total  product  of 
the  efforts  of  the  citizens. 

124 


THE  PEOPLE  OF  THE  UNITED  STATES   125 

We  shall  consider  first  this  great  national  income 
stream  as  a  whole,  and  later  the  changes  that  have 
taken  place  therein  during  the  last  sixty  years. 

With  existing  data,  it  is  difficult,  if  not  impossible, 
to  estimate  with  great  accuracy  the  total  value  of 
the  national  income  at  any  given  date.  Two  methods 
of  attack  are  available:  first,  a  study  of  the  consump- 
tion of  the  people;  second,  an  investigation  into  the 
production  of  the  nation.  Owing  to  the  nature  of  the 
existing  data,  the  second  method  is  probably  more 
workable  in  practice.  This  is  due  to  the  fact  that  we 
have  little  reliable  information  concerning  the  prices 
of  goods  sold  at  retail. 

Fairly  accurate  records  of  wholesale  prices  are 
easily  obtainable  but  we  have  no  means  of  readily 
ascertaining  the  percentages  added  to  these  prices 
by  various  middlemen  before  the  commodities  reach 
the  hands  of  the  final  consumer.  This  percentage  is 
probably  variable  to  a  considerable  degree,  hence  the 
ratio  of  wholesale  to  retail  prices  might  be  quite 
different  in  1910  from  what  it  was  in  1850.  Besides, 
in  the  measurement  of  goods  consumed,  it  is  almost 
inevitable  that  more  or  less  duplication  will  result, 
owing  to  the  inclusion  of  the  finished  products  of  one 
industry  among  the  raw  materials  of  another.  Thus, 
some  cloth  goes  directly  to  the  ultimate  consumer 
but  a  large  share  is  further  manufactured  by  garment 
factories  and  tailors.  Much  flour  is  used  by  the 


126  WEALTH  AND  INCOME  OF 

housewife  in  her  cooking  but  almost  equally  important 
is  the  percentage  utilized  by  bakers.  In  the  strictest 
sense,  of  course,  the  manufacturing  process  is  not 
complete  until  the  housewife  has  made  the  dress  or 
baked  the  bread  but,  since  we  have  no  statistical 
record  of  the  values  added  by  the  American  house- 
wives, it  makes  it  impracticable  to  include  their 
services  in  the  computed  value  of  the  national  divi- 
dend. 

An  attempt  was  made  by  the  present  writer  to 
estimate  the  total  value  of  goods  consumed  by  the 
American  people  but  the  difficulties  of  obtaining 
reasonably  accurate  results  were  so  great  that  the 
undertaking  was  abandoned  in  favor  of  another  mode 
of  attack.  It  might  be  said,  however,  that  the  crude 
estimates  of  consumption  checked  closely  enough 
with  those  made  by  the  method  hereafter  described 
to  indicate  that  a  sufficient  expenditure  of  effort 
might  result  in  arriving  at  a  close  approximation  to 
the  money  value  of  the  goods  used  up  in  each  year  by 
the  people  of  the  nation  as  a  whole. 

Two  methods  of  approximating  the  total  national 
income  have  suggested  themselves:  first,  to  multiply 
the  average  book  income  of  the  families  in  each  class 
of  the  population  by  the  number  of  families  composing 
the  respective  class,  then  adding  together  the  products; 
second,  to  trace  the  process  of  production  from 
nature  to  the  final  consumer.  The  first  plan  was 


THE  PEOPLE  OF  THE  UNITED  STATES   127 

tried  for  1910  and  the  totals  did  not  differ  greatly 
from  those  obtained  by  the  other  method.  The 
second  mode  of  procedure  proved,  however,  to 
require  less  guessing  and  to  conform  far  more  closely 
to  the  limits  of  existing  reliable  data.  It,  therefore, 
has  been  adopted  as  the  principal  modus  operandi 
for  this  chapter.  It  becomes  necessary,  then,  to 
explain  this  plan  in  some  detail. 

Natural  resources  often  possess  value  just  as  they 
exist  in  mine  or  forest  or  soil.  In  the  first  process  of 
rendering  these  resources  available  for  human  needs, 
there  is  constantly  being  added  the  value  of  labor  and 
capital  used  up  in  extracting  them  together  with 
certain  profits  for  the  entrepreneur.  The  raw  materi- 
als thus  produced  go  in  large  part  to  the  factories. 
Here,  their  value  is  again  increased  by  labor,  capital, 
and  entrepreneurs.  Meantime,  our  transportation 
agencies,  principally  wagons,  vessels,  and  railways, 
must  be  recompensed  for  moving  things  from  place 
to  place.  Later,  the  merchant  adds  value  to  the 
goods  by  holding  them  in  readiness  to  serve  the 
convenience  of  his  customers.  Incidentally,  industry 
is  kept  properly  in  operation  through  the  aid  of 
physicians,  teachers,  lawyers,  clergymen,  and  govern- 
ment officials.  Their  pay  must  be  added  to  the 
expenses  of  production.  There  is  also  an  army  of 
men  and  women  employed  in  producing  services  by 
comparatively  direct  methods.  This  army  includes 


128  WEALTH  AND  INCOME  OF 

waiters,  barbers,  tailors,  baseball  players,  actors, 
musicians,  and  others  who  give  personal  service  that 
immediately  satisfies  our  wants.  All  of  their  efforts 
must  be  rewarded.  In  the  end,  the  combined  prod- 
ucts of  these  varied  activities  unite  to  form  the 
national  income.  The  capitalist  lays  aside  the  part 
that  is  saved  while  the  ultimate  consumer  must  pay 
for  the  much  larger  share  used  in  the  direct  satis- 
faction of  wants.  The  aggregate  bill  of  the  final 
consumer  is  identical  with  the  value  of  the  national 
dividend.  We  must,  in  this  connection,  be  careful  to 
avoid  the  apparently  common  impression  that  the 
ultimate  consumers  form  one  class  of  the  population 
and  the  producers  another.  Most  of  the  adult 
population  of  the  country  fall  under  both  heads, 
while  small  children  and  the  few  persons  of  parasitic 
leisure  constitute  the  small  group  who  may  correctly 
be  classed  as  consumers  only. 

The  final  estimates  of  the  total  net  book  income  of 
the  people  of  the  United  States  appear  in  the  second 
column  of  Table  XXI.  Since  savings  are  included, 
the  amounts  are  materially  larger  than  the  aggregates 
of  the  national  dividend  for  the  various  periods. 
This  table,  as  illustrated  by  Fig.  13,  shows  the  re- 
markable record  of  an  increase  of  the  national  income, 
by  the  year  1910,  to  about  fourteen  times  its  value 
in  1850  with  the  per  capita  share  more  than  trebled. 
In  the  present  period  of  rising  prices,  some  one  will 


THE  PEOPLE  OF  THE  UNITED  STATES   129 
TABLE  XXI 


THE  ESTIMATED  INCOME  OP  THE  PEOPLE  OP  THE  CONTINEN- 

TAL UNITED  STATES. 

Dollars'  Worth  of 

Census 
Year. 

Total 
Money  In- 
come in 

Per 

Capita 
Income 

Average 
Size  of 

Family 
Income 

Index 
of 
Price 

Purchasing  Power 
at  Average  Prices 
of  1890  to  1899.* 

Millions 
of  Dollars.1 

in 

Dollars. 

ily.» 

Dollars. 

Level.3 

Per 

Per 

Capita. 

Family. 

1850 

2,214 

95 

5.6 

535 

139.2 

69 

384 

1860 

3,636 

116 

5.3 

613 

141.3 

82 

434 

1870 

6,720 

174 

5.1 

889 

221.6 

79 

401 

1880 

7,391 

147 

5.0 

735 

132.4 

111 

555 

1890 

12,082s 

192 

4.9 

941 

113.6 

169 

828 

1900 

17,965 

236 

4.7 

1,109 

101.7 

232 

1,090 

1910 

30,530 

332 

4.5 

1,494 

1265 

262 

1,181 

1  The  figures  in  this  column  are  summaries  of  the  estimates 
for  the  various  industries  as  shown  in  Table  XXIII.  The  mode 
of  estimation  was  as  follows:  To  the  value  of  the  products  of  the 
extractive  industries  (agriculture,  fishing,  and  mining)  was 
added  the  value  imparted  to  these  products  by  the  processes  of 
manufacture,  transportation,  holding  for  sale,  etc.  The  services 
of  the  government  were  assumed  to  be  worth  the  amount  paid 
for  running  the  government.  The  estimated  value  of  the  direct 
services  of  persons  and  of  residence  property  was  added.  To 
avoid  duplication,  building  costs  were  deducted  since  the  income 
from  buildings  later  appears  as  either  business  or  residence 
"rentals."  The  remainder  constitutes  the  national  income. 

The  information  is  almost  entirely  derived  from  the  United 
States  Census.  The  results  are  believed  to  be  moderately 
accurate.  The  errors  for  1900  and  1910  should  not  be  greater 
than  ten  per  cent.  The  earlier  census  figures  are  believed  to  be 
much  less  accurate  and  the  error  probably  increases  gradually  as 
the  time  distance  from  the  present  increases.  Even  the  figures 
for  1850,  however,  are  probably  within  twenty-five  per  cent  of 
the  correct  results. 
10 


130 


be  sure  to  suggest  that  this  is  only  an  apparent 
increase  due  to  the  change  in  the  price  level.  This  is 
in  no  sense  true,  as  is  shown  by  the  last  two  columns 

FIGURE  13 

ESTIMATED  AVERAGE  PER  CAPITA  INCOME  MEASURED  IN  MONEY 

AND  PURCHASING  POWER  FOR  THE  CONTINENTAL 

UNITED  STATES 


P.eE  Capita-Income 
W  H  •  Jk 

08888 

400 

T, 

idex  of  Average  Wholesale  Prices, 
oney  Income  Per  Capita. 
er  Capita  Purchasing  Power  of 
oney  .Income  at  Prices  of  1890  -  1899 

M 

T> 

300 

If 

^ 

s 

\ 

< 

^ 

**"* 

/ 

7 

/ 

\ 

—-  -_ 

X 

^ 

/ 

'/ 

,  " 

/ 

X 

^ 

ttmt 

0, 

*.-• 

100 

1  — 

.-  — 

- 

5       i       i       I       I       i       1 

Census  Years 

2  Abstract  of  the  United  States  Census  for  1910,  p.  259. 

3  Wholesale  price  index  reduced  to  base  1890-1899  from  the 
Aldrich  Report  on  Wholesale  Prices,  Part  I,  p.  91,  and  from  Bulletin 
114  of  the  United  States  Bureau  of  Labor  Statistics,  p.  149.     Price 
level  given  for  year  preceding  date  of  census. 

4  Money  income  divided  by  the  price  index  and  multiplied 
by  100.     The  cost,  at  average  prices  of  1890-1899,  of  the  goods 
which  could  be  purchased  with  the  money  income  received  in 
the  given  year. 

6  Estimated  by  Charles  B ,  Spahr  in  The  Present  Distribution  of 
Wealth  in  the  United  States,  p.  105,  at  $10,800,000,000— about 
11%  less. 


THE  PEOPLE  OF  THE  UNITED  STATES   131 

in  which  price  changes  have  been  eliminated  by 
dividing  the  income  by  the  index  of  wholesale  prices. 
The  adjustment  merely  accentuates  the  change, 
showing  that  the  period  has  seen  the  purchasing 
power  of  the  income  of  the  average  individual  more 
nearly  quadrupled  than  trebled.  The  only  reverse 
movement  occurred  in  the  ten  years  from  1860  to 
1870  and  this  was  probably  due  to  the  destructive 
effects  of  the  Civil  War,  though  it  is  possible  that  the 
apparent  decrease  during  this  decade  resulted  from 
the  1870  Census  returns  from  the  South  being  in- 
adequate, owing  to  the  disturbed  condition  of  that 
section  of  the  country. 

But  a  large  share  of  the  income  of  the  people  has 
not  been  consumed  from  year  to  year  but  has  been 
laid  aside  to  increase  the  capital  funds  of  the  country. 
This  is  evidenced  by  the  rapidly  increasing  wealth 
of  the  United  States  as  set  forth  in  Chapter  II. 
True,  part  of  this  wealth  increase  has  been  nominal 
and  represents  only  increasing  land  scarcity  but  a 
larger  proportion  consists  of  a  real  increase  in  capital. 
It  is  worthy  of  note,  however,  that  rising  land  values 
constitute  a  growing  fraction  of  the  nominal  increase 
in  the  wealth  of  the  people  of  the  nation  for,  in  the 
decade  1850-1860,  only  a  little  over  a  third,  while, 
in  the  last  decade,  nearly  three-fifths  of  the  recorded 
increase  in  riches  consisted  of  higher  land  values. 


132 


WEALTH  AND  INCOME  OF 


THE  NATIONAL  DIVIDEND 

By  deducting  the  total  capital  savings  from  the 
book  income,  we  arrive  at  the  national  dividend. 
Table  XXII  gives  us  a  very  rough  estimate  of  the 
total  savings  and  of  the  value  of  the  goods  actually 
consumed  by  the  people. 

TABLE  XXII 


THE  NATIONAL  DIVIDEND 

for  the  Continental  United  States  Measured  in  Purchasing 

ower.     Estimates  Based  on  Production. 

Value  at  Prices  of 

Estimated 

Estimated 

Net  Goods 

1890-1899  of  all 

Total 

Capital 

Consumed 

Index  of 

Goods  Consumed. 

Census 

Income 

Sayings  in 

in 

Year. 

in 

Millions 

Millions 

Per 

Millions 
of  Dollars,  i 

of 
Dollars.* 

of 
Dollars3 

Total  in 
Millions  of 

Capita 
in 

Dollars. 

Dollars. 

1850 

2,214 

400 

1,814 

139.2 

1,303 

56 

1860 

3,636 

843 

2,793 

141.3 

1,977 

63 

1870 

6,720 

1,047 

5,673 

221.6 

2,560 

66 

1880 

7,391 

1,267 

6,124 

132.4 

4,626 

92 

1890 

12,082 

1,612 

10,470 

113.6 

9,218 

146 

1900 

17,964 

1,569 

16,395 

1017 

16,121 

212 

1910 

30,529 

2,000 

28,529 

126.5 

22,552 

245 

It  must  not  be  supposed  that  all  increases  in  land 
values  are  due  to  growing  land  scarcity.  Much  of 
the  higher  value  of  land  is  due  to  improvements 

1  See  Table  XXI. 

2  Estimated  by  deducting  from  the  average  annual  increa 
in  wealth  for  the  decade,  the  average  annual  increase  hi  land 
values  for  the  same  period. 

8  Column  2  minus  column  3. 


THE  PEOPLE  OF  THE  UNITED  STATES   133 

therein  such  as  clearing,  drainage,  better  transporta- 
tion facilities,  etc.  Only  part  of  these  improvements 
are  accounted  for  under  the  head  of  railway  and 
government  expenditures,  etc. 

The  fact  was  brought  out  in  a  preceding  chapter 
that  the  wholesale  price  index  is  not  adequate  to 
reduce  accurately  money  incomes  to  a  basis  of  pur- 
chasing power.  Nevertheless,  any  possible  error 
involved  is  far  too  slight  to  offset  the  striking  growth 
here  shown. 

There  are  two  other  forces,  however,  which  un- 
doubtedly tend  to  lessen  the  importance  of  this  great 
increase  in  money  income.  The  first  of  these  is  the 
disappearance,  in  a  large  measure,  of  the  services  of 
free  goods — services  which  formerly  played  a  much 
more  important  part  in  the  life  of  the  American 
people.  The  second  is  the  transfer  of  the  process  of 
production  from  the  home  to  the  factory.  The  most 
of  the  value  added  by  the  housewife  has  always 
escaped  the  census  taker  but,  in  the  times  when  the 
majority  of  the  articles  consumed  by  the  family  had 
obtained  a  large  part  of  their  utility  through  her 
efforts,  this  omission  was  of  far  greater  importance 
than  in  these  days  when  so  many  of  our  housewives 
patronize  the  steam  laundry  and  buy  clothing  ready 
made  and  food  ready  cooked  and  when  sewing  and 
bread  making  are  tending,  like  spinning  and  weaving, 
to  join  the  ranks  of  the  lost  arts.  Women  still  toil 


134  WEALTH  AND  INCOME  OF 

but,  more  and  more,  their  work  has  been  transferred 
from  the  kitchen  to  the  office  or  factory.  In  this 
way,  they  have  entered  the  ranks  of  the  "gainfully 
employed"  and  the  products  of  their  labor  appear 
regularly  in  the  Census  tables. 

But,  after  all  reasonable  allowances  have  been  made, 
the  fact  remains,  practically,  that,  beginning  with 
1870,  there  has  been  an  increase  in  the  national 
dividend  so  enormous  that  it  cannot  logically  be 
ascribed  to  anything  but  the  tremendous  advance 
in  productive  power  due  to  the  revolutionary  improve- 
ments in  industry  which  have  characterized  the  last 
half  century.  It  seems  improbable  that  any  other 
great  nation  has  ever  experienced  such  sweeping 
gains  in  the  average  income  of  the  inhabitants.  It 
has,  almost  necessarily,  been  accompanied  by  a  great 
rise  in  the  standard  of  living.  The  increase  has  not 
been  so  much  in  the  quantity  as  in  the  quality  of  the 
goods  thought  of  as  necessaries  by  the  average  citizen. 
Today,  the  urban  housewife,  for  example,  looks  upon 
running  water,  a  bath  room,  electric  lights,  a  gas 
range,  and  a  piano  as  necessary  household  equip- 
ments. She  demands  that  her  food  be  purchased 
not  in  bulk,  but  in  air-tight  sanitary  packages. 
She  does  not  care  to  go  to  market  but  expects  her 
purchases  to  be  delivered  in  small  amounts  at  frequent 
intervals.  She  must  have  clothing  not  only  sufficient 
for  comfort  and  neatness  but  also  strictly  a  la  mode. 


THE  PEOPLE  OF  THE  UNITED  STATES   135 

Her  children  must  not  thumb  dog-eared  books  and 
dirty  slates  while  seated  in  a  dingy  little  room  on 
rough  wooden  benches  in  the  presence  of  a  pedagogue 
who  pieces  out  his  wages  as  a  farm  laborer  by  teaching 
"the  three  R's"  during  the  winter.  On  the  contrary, 
they  must  have  an  endless  chain  of  interesting  reading 
books,  must  write  in  pretty  clean  tablets,  and  must 
work  with  up-to-the-minute  laboratory  equipment 
under  the  direction  of  highly  trained  teachers  in  a 
beautiful,  light,  airy  school  room.  Neither  are  the 
children  expected  to  quit  school  when  they  have 
learned  to  "figger"  and  to  parse.  They  must  go  to 
high  school  and  become  versed  in  the  scientific 
knowledge  of  the  day,  with  a  little  home  economics, 
music,  and  manual  training  on  the  side.  When 
supper  is  over,  the  children  and  their  parents  do  not 
entertain  each  other  or  visit  the  neighbors,  but 
instead  hire  the  services  of  paid  entertainers  at  the 
theatre  or  moving  picture  show  or  take  a  ride  in  the 
boat  or  car  or  automobile.  No  matter  which  way 
one  turns,  the  demand  is  for  better  and  better  quality, 
more  and  more  elaborate  service,  greater  and  greater 
variety. 

And  most  of  this  is  as  it  should  be.  If  our  great 
inventions  and  discoveries  do  not  provide  more 
luxuries  for  the  average  man,  it  is  hard  to  see  that 
they  have  been  of  any  service  to  civilization.  But,  if 
they  have  resulted  in  uplifting  the  general  standards 


136  WEALTH  AND  INCOME  OF 

of  comfort,  this  service  should  be  frankly  recognized 
and  we  should  appreciate  the  economic  advantages 
which  the  new  era  of  industry  has  enabled  us  to 
enjoy. 

Of  late,  we  have  had  a  period  of  "muck-raking" 
in  which  all  things  that  exist  have  been  pictured  as 
very  bad  and  growing  worse.  The  misery  of  life, 
the  difficulty  of  making  both  ends  meet,  has  been 
over-emphasized.  True,  it  is  just  as  difficult  to 
secure  the  articles  required  by  our  standard  of  living 
as  it  ever  was.  But,  our  standard  of  living  has  grown 
more  expensive.  Increases  in  quality  cost  even  more 
than  increases  in  quantity.  Our  wants  always  have 
and  probably  always  will  increase  with  our  ability  to 
satisfy  them  so  that  there  is  never  any  hope  of  winning 
the  race  with  our  standard  of  comfort.  Such  a  race 
is  just  like  chasing  one's  shadow.  Nevertheless,  to 
the  present  author,  a  larger  per  capita  supply  of 
economic  goods  appears  to  be  a  most  distinct  benefit 
to  any  nation  and  the  United  States  has  been  greatly 
favored  in  this  line  during  the  last  sixty  years. 

INDUSTRIAL  SHARES  OP  THE  NATIONAL  INCOME 

We  have  thus  far  considered  the  national  income  as 
a  unit.  Our  next  task  will  be  to  divide  it  according 
to  its  origin  and  study  some  of  the  separate  segments. 
There  are  many  parts  to  the  great  national  mill  that 
grinds  out  the  finished  products  for  our  use.  These 


THE  PEOPLE  OF  THE  UNITED  STATES   137 

parts  may  work  smoothly  as  one  huge,  intricate 
machine  or  each  industry  may  form  together  an 
independent  unit  almost  disconnected  with  the  other 
industries,  and  meeting  them  only  as  a  trader  in  the 
markets  of  the  world.  The  opposite  extremes  are 
illustrated  by  the  goals  of  two  branches  of  present 
day  socialists.  The  national  socialists  would  have 
all  industry  united  under  the  control  of  the  central 
government.  The  industrial  socialists  would  have 
each  industry  a  separate  unit  owned  by  the  workers 
therein.  Let  us  for  the  moment  think  of  the  great 
fields  of  industry  from  this  latter  point  of  view, 
separating  out  agriculture  from  manufacturing,  manu- 
facturing from  mining,  etc.  Let  us  group  together 
within  each  single  industry  its  capitalists,  proprietors, 
superintendents,  foremen,  and  workmen  and  ascer- 
tain, if  possible,  the  share  of  the  total  income  stream 
which  all  of  these  persons,  aided  by  their  equipment, 
actually  produce.  How  much  does  society  gain  from 
the  efforts  of  the  farmers  and  their  families  and 
employees?  How  large  a  value  do  the  manufacturing 
interests  add  to  the  total  net  product?  These 
queries  are  partially  answered  by  Table  XXIII  and 
Fig.  14. 

In  order  to  compare  more  readily  one  industry 
with  another,  these  figures  have  been  reduced  to 
percentages  of  the  entire  national  income.  The 
results  appear  in  Table  XXIV. 


138 


WEALTH  AND  INCOME  OF 


TABLE  XXIII 


THE  ESTIMATED  INDUSTRIAL  DISTRIBUTION  OF  THE  NATIONAL 

VALUE   PRODUCT,   SHARES    MEASURED    IN   MILLIONS    OF 

DOLLARS  WORTH.* 

Com- 

Manu- 

Cen- 

Total 
Product 

Govern- 

mercial 
and  Pro- 

factur- 
ing, 

Trans- 

Fish- 

Min- 

Agricul- 

sus 
Year. 

in  Mil- 
lions of 

ment.1 

fessional 
Ser- 

Light 
and 

porta- 
tion.'4 

ing.5 

ing,  e 

ture.7 

Dollars. 

vices.  2 

Power.3 

1850 

2,213.8 

100.3 

469.5 

434.2 

411.9 

10.0 

23.0 

764.9 

1860 

3,635.6 

161.7 

791.2 

801.0 

718.6 

12.9 

62.0 

1,088.2 

1870 

6,720.1 

436.6 

1,989.9 

1,607.5 

742.9 

15.0 

145.0 

1,783.2 

1880 

7,390.7 

458.3 

2,473.7 

1,803.5 

927.4 

33.8 

218.0 

1,476.0 

1890 

12,081.6 

784.9 

3,652.3 

3,822.3 

1,194.9 

38.2 

329.0 

2,260.0 

1900 

17,964.5 

1,469.0 

5,466.9 

5,125.3 

1,581.8 

42.5 

591.0 

3,688.0 

1910 

30,529.5 

2,591.8 

8,977.2 

8,437.6 

2,656.0 

48.9 

976.0 

6,842.0 

1  Includes  national,  state,  and  local  governments. 

2  Roughly  estimated  on  the  basis  of  a  constant  ratio  to  the 
product  of  urban  population  and  average  income. 

3  Value  added  by  manufacturing  process,  less  expense  for  fuel, 
building  material,  and  other  products  of  other  industries  necessary 
for  upkeep  of  the  plants. 

4  Gross  earnings,  less  depreciation  charges,  fuel  used,  material 
used  up  for  equipment,  etc. 

6  Value  of  fish  caught,  less  upkeep  of  vessels,  nets,  etc. 

6  Value  of  products  sold,  less  new  machinery  and  buildings  and 
depreciation  on  capital  goods  employed. 

7  Value  of  products  consumed  on  farms  for  direct  satisfaction 
of  human  wants  or  sold  to  outside  consumers;  also  includes  rental 
value   of  residences  less   expenditures  for  building   materials; 
deducts  machinery  and  fertilizers  purchased. 

8  For  the  distribution  of  the  product  of  each  industry  to  wages, 
interest,  rent,  and  profits  see  Tables  XXXa  to  XXXd  in  the 
Appendix. 


THE  PEOPLE  OF  THE  UNITED  STATES        139 


FIGURE  14 

ESTIMATED  SHARES  OP  THE  TOTAL  VALUE  OF  THE  NATIONAL 
INCOME    PRODUCED   IN   EACH   OF  THE  PRINCIPAL  FIELDS  OP 

INDUSTRY 
in  the  Continental  United  States 

32 


Commtrctal  and 
Profeuuul 


Census  Year 


This  table,  and  Fig.  15  which  accompanies  it, 
bring  out  the  fact  that  some  industries  have  grown 
decidedly  at  the  expense  of  others.  The  government 
is  gradually  absorbing  a  larger  and  larger  share  of  the 


140 


WEALTH  AND  INCOME  OF 


TABLE  XXIV 


THE  ESTIMATED1  PERCENTAGES  OP  THE  TOTAL  VALUE  OP  THE 

NATIONAL  INCOME  PRODUCED  BY  EACH  GENERAL  FIELD 

OP  INDUSTRY  IN  THE  CONTINENTAL  UNITED  STATES. 

Com- 

Manu- 

mercial 

factur- 

Census 
Year. 

Govern- 
ment. 

and 
Profes- 
sional 

ing  and 
Light 
and 

Trans- 
por- 
tation. 

Fish- 
ing. 

Min- 
ing. 

Agri- 
cul- 
ture. 

Total. 

Services. 

Power. 

1850 

4.5 

21.2 

19.6 

18.6 

.5 

1.0 

34.6 

100.0 

1860 

4.4 

21.8 

22.0 

19.8 

.4 

1.7 

299 

1000 

1870 

6.5 

29.6 

23.9 

11.1 

.2 

2.2 

26.5 

100.0 

1880 

6.2 

33.5 

24.4 

12.5 

.5 

2.9 

20.0 

100.0 

1890 

6.5 

30.2 

31.6 

9.9 

.3 

2.7 

18.7 

99.9 

1900 

8.2 

30.4 

28.5 

8.8 

.2 

3.3 

20.5 

99.9 

1910 

8.5 

29.4 

27.6 

8.7 

.2 

3.2 

22.4 

100.0 

activities  of  the  nation,  the  percentage  expended  for 
public  purposes  having  nearly  doubled  since  1850. 
This  seems  to  indicate  a  trend  in  the  direction  of 
state  socialism.  Despite  the  development  of  our 
immense  transportation  systems,  that  branch  of 
industry  has  failed  to  maintain  its  relative  rank  as  to 
value  of  product  but  has  declined  greatly.  We 
shall  see  later  that  this  decline  does  not  show  a  falling 
off  in  service  but  is  caused  by  relatively  lower  rates; 
while  other  commodities  have  fluctuated,  transporta- 
tion has  steadily  grown  cheaper.  Agriculture  and 
fishing  have  also  been  unable  to  keep  up  with  the 
procession  though  agriculture  has  been  gaining  for  the 
1  Computed  from  Table  XXIII. 


THE  PEOPLE  OF  THE  UNITED  STATES   141 

last  two  decades.  This  is  doubtless  due  to  the  price 
of  agricultural  products  rising  more  rapidly  than  the 
prices  of  other  commodities.  Mining  still  furnishes 
a  comparatively  small  part  of  the  national  income 

FIGURE  15 

ESTIMATED  RELATIVE  SHARES  OF  THE  PRINCIPAL  FIELDS  OP 
INDUSTRY  IN  THE  NATIONAL  INCOME  FOR  THE  CONTINENTAL 
UNITED  STATES;  MEASURED  IN  TERMS  OF  MONEY  VALUE 

100 


Census  .Years. 

but  it  has  been  advancing  more  rapidly  than  any 
other  great  branch  of  industry.  Manufacturing  and 
general  commercial  and  professional  pursuits  made 
rapid  gains  up  to  1890  since  which  date  they  have 
declined  somewhat.  Their  recent  relative  decline 
seems  to  be  due  to  the  rising  value  of  products 
depending  more  directly  on  the  land.  Whichever 


142  WEALTH  AND  INCOME  OF 

way  we  turn,  we  discover  growing  land  scarcity 
appearing  as  an  important  factor  in  distribution. 

Having  compared  the  different  branches  of  industry 
with  each  other,  the  next  step  is  to  analyze  each 
separately.  Two  leading  questions  come  to  mind: 
First,  how  do  the  value-products  turned  out  by  each 
worker  compare  in  the  different  branches  of  industry? 
Second,  by  which  of  the  different  fields  are  the  new 
wants  of  the  consumers  being  mainly  satisfied?  In 
other  words,  in  which  industries  are  the  supplies  of 
articles  produced  for  each  inhabitant  most  rapidly 
increasing  in  quantity? 

We  shall  first  take  up  the  consideration  of  a  pro- 
ductive activity  not  usually  considered  as  industrial, 
that  is,  the  work  of  the  government.  The  rising 
cost  of  this  institution  has  caused  much  comment, 
largely  adverse  in  nature,  concerning  the  extravagance 
of  government  and  the  waste  of  the  peoples'  money. 
The  rejoinder  of  those  responsible  for  the  taxes 
usually  is  that  the  country  is  growing  and  that, 
naturally,  the  governmental  expenses  must  grow  with 
it.  If,  by  country  growth,  we  mean  increase  in  popu- 
lation, taxes  have  risen  out  of  all  proportion  thereto. 
Table  XXV  reduces  all  expenses  to  a  per  capita 
basis  and  then  eliminates  changes  due  to  the  price 
level. 

The  last  column  shows  us  that,  if  taxes  were  settled 
for  in  commodities,  it  would  require  nearly  seven 


TEE  PEOPLE  OF  THE  UNITED  STATES   143 


times  as  much  to  pay  the  tax  bill  of  the  average 
individual  as  was  required  in  1850.  Even  though 
average  income  has  nearly  quadrupled,  it  has  been 
far  outstripped  by  government  expeditures.  The 
justification  for  increasing  expenses  of  government 

TABLE  XXV 


THE  ESTIMATED  CHANGES  IN  THE  PER  CAPITA  EXPENSE  OF 
GOVERNMENT  FOR  THE  CONTINENTAL  UNITED  STATES. 

Census 
Year. 

Expenses  of 
Government 
in  Millions  of 
Dollars.1 

Expense  per 
Capita  for 
Entire 
Population. 

Price 
Level.1 

Index  of 
"Real"  Ex- 
pense per 
Capita.8 

1850 
1860 
1870 
1880 
1890 
1900 
1910 

100.3 
161.7 
436.6 
458.3 
784.9 
1,469.0 
2,591.8 

$  4.32 
5.14 
11.32 
9.14 

12.47 
19.33 
28.18 

139.2 
141.3 
221.6 
132.4 
113.6 
101.7 
126.5 

3.11 
3.64 
5.11 
6.90 
10.99 
19.01 
22.28 

can  not,  then,  lie  in  the  growth  of  the  country  but 
must  be  made,  if  at  all,  on  the  ground  that  govern- 
ment today  is  taking  over  the  functions  formerly 
left  to  private  industry  and  is  giving  vastly  greater 
service  to  the  citizen  of  today  than  the  citizen  of 
sixty  years  ago  received  from  the  government  of  his 
day. 

1  See  Table  XXIII. 

Wholesale  prices  for  year  preceding  the  census. 
8  Expense  in  dollars  if  commodities  had  remained  at  the  prices 
of  1890  to  1899. 


144 


WEALTH  AND  INCOME  OF 


TABLE  XXVI 


THE  ESTIMATED  CHANGES  IN  THE  TOTAL  PRODUCTION  AND  IN 

THE    PER  CAPITA  PRODUCTION   AND   SUPPLY   OP   MANU- 

FACTURED ARTICLES  IN  THE  CONTINENTAL  UNITED  STATES. 

Index 
of 

Index  of 

Census 
Year. 

Total  Value 
Produced 
in  Millions 
of  Dollars.' 

Prices 
of 
Manu- 
factured 

Arti- 

Index of 
Quantity 
of  Manu- 
factured 
Articles.2 

Quantity 
per  Capita 
for  Total 
Popula- 
tion. » 

Thousands 
of  Persons 
Employed 
in  Manu- 
facturing.* 

Quantity 
Produced 
per  Person 
Engaged 
in  Manu- 

cles.1 

facturing.6 

1850 

434.2 

137.8 

315.1 

13.59 

957 

329 

1860 

801.0 

129.7 

617.6 

19.64 

1,311 

471 

1870 

1,607.5 

191.7 

838.6 

21.75 

2,054 

408 

1880 

1,803.5 

122.9 

1,466.9 

29.29 

2,733 

537 

1890 

3,882.3 

112.7 

3,445.0 

54.73 

4,552 

757 

1900 

5,125.3 

100.7 

5,090.0 

66.98 

5,716« 

891 

1910 

8,437.6 

123.9 

6,810.1 

74.05 

8,0256 

849 

Table  XXVI  shows  the  tremendous  growth  which 
has  taken  place  in  the  production  of  manufactured 
articles.  The  value  has  been  divided  by  the  price 
index  for  manufactured  goods  in  order  to  eliminate 

1  Base  1890-1899;  Bulletin  114,  United  States  Bureau  of  Labor 
Statistics,  p.  14,  and  estimated  from  Senate  Report  1394,  Part  1, 
on  Wholesale  Prices,  p.  91. 

2  Millions  of  dollars'  worth  at  prices  of  1890-1899. 
8  Dollars'  worth  at  prices  of  1890-1899. 

4  Statistical  Abstract  of  the  United  States  for  1912,  p.  776. 

6  Dollars'  worth  at  prices  of  1890-1899. 

8  Estimated  from  the  Abstract  of  the  United  States  Census  for 
1910,  pp.  438-9. 

7  Value  added  by  manufacturing  processes  less  expenditures 
for  advertising,  insurance,  etc.,  which  have  been  included  under 
"Commerce." 


THE  PEOPLE  OF  THE  UNITED  STATES   145 

fluctuations  in  the  price  level.  By  the  fourth  column 
of  the  table,  we  see  that  over  five  times  as  large  a 
supply  of  manufactured  articles  is  now  turned  out 
for  each  person  in  the  United  States  as  was  produced 
in  1850.  The  workers  in  industry  have  become  more 
efficient,  each  one,  on  the  average,  producing  more 
than  two  and  a  half  times  as  much  as  in  1850.  We 
shall  later  see  that  wages  have  risen  in  a  somewhat 
similar  ratio,  though  this  would  by  no  means  neces- 
sarily follow,  for  the  capital  supply  per  laborer  has 
been  greatly  increased  during  the  period. 

The  figures  given  on  page  439  of  the  Abstract  of 
the  United  States  Census  for  1910  indicate  the  fol- 
lowing investment  per  wage  earner  for  the  different 
census  years. 

1850 $   557  1890 $1,535 

1860 770  1900 1,850 

1870 825  1910 2,706 

1880 1,021 

Unless,  then,  the  modern  productivity  theory  is 
sadly  in  error,  we  should  naturally  anticipate  the 
increase  in  product  per  laborer,  shown  in  the  last 
column  of  Table  XXVI,  but  we  should  also  be  sur- 
prised if  labor  continued  to  receive  as  large  a  share 
of  the  product  as  formerly. 

Table  XXVII  gives  a  similar  view  of  the  changes 
in  the  productivity  of  transportation  by  rail,  water, 

and  wire.     Unfortunately,  we  have  no  good  statistics 
11 


146 


WEALTH  AND  INCOME  OF 


of  the  prices  of  transportation  before  1890.  Since 
that  date,  freight  and  passenger  charges  are  accurately 
computed  for  the  steam  railways  but  not  for  street 

TABLE  XXVII. 


THE  ESTIMATED  CHANGES  IN  THE  TOTAL  PRODUCTION  AND 

IN  THE  PER  CAPITA  PRODUCTION  AND  SUPPLY  OF  WATER, 

RAIL,  AND  WIRE  TRANSPORTATION  FOR  THE  CONTINENTAL 

UNITED  STATES. 

OO 

Si 

*£% 

|?d 

"    "d 

«-?L 

!!•„, 

~  u.^  a 

I 

^3  g 

£  •  8 

=350 

flgj 

"§"0.2 

^*W  g' 

•§.|a 

|**ifia 

I 

Jel 

«^.2 

111 

gll 

y^i 

III 

w  Bj 

?lll 

§ 

3'«t8 

£.£P^ 

.Jtf  a 

Bvl 

"a  o-'g.g 

|BH 

-111 

sj 

«1J 

<3  "35 

M     H 

<§    o 

fi5- 

11* 

1850 

411.9 

3.74 

3.10 

120.3 

5.19 





1860 

718.6 

2.93 

2.49 

261.3 

8.31 

— 

— 

1870 

742.9 

3.02 

2.48 

271.3 

7.04 

348 

780 

1880 

927.4 

1.47 

1.38 

608.6 

12.13 

496 

1,227 

1890 

1,194.9 

.934 

1.00 

1,082.0 

17.19 

809 

1,337 

1900 

1,581.8 

.7243 

.811 

1,766.2 

23.24 

1,079 

1,637 

1910 

2,656.0 

.7633 

.830 

2,898.0 

31.51 

1,744 

1,661 

1  See  Table  XXIII. 

2  For  years  1850  to  1890  a  simple  average  of  average  rates  for 
different  railways — Senate  Report  1394,  Part  1,  pp.  615-617. 

*  Statistical  Abstract  of  the  United  States  for  1912,  p.  324. 
4  Approximate  value  in  millions  of  dollars  at  prices  of  1890- 
1899. 

8  Approximate  value  in  dollars  at  prices  of  1890-1899. 

6  Estimated    from   statistics    of   railway    employees    in    the 
Statistical  Abstracts  of  the  United  States  and  from  the  Census  of 
Occupations  for  1900,  pp.  xxxvi-lvii. 

7  Passenger  rates  have  not  been  lowered  as  rapidly  as  freight 
rates. 

8  Figures  for  year  preceding  census. 


THE  PEOPLE  OF  THE  UNITED  STATES        147 


FIGURE  16 

ESTIMATED  OUTPUT  IN  DIFFERENT  FIELDS  OF  INDUSTRY  PER 
PERSON  EMPLOYED 

Measured  in  Dollars  Worth  at  Prices  of  1890-1899  for  the  Con- 
tinental United  States 


Census  Year. 


railways  and  vessels.  The  index  given  in  column 
four  is,  therefore,  very  unreliable  before  1890,  and 
since  that  date,  is  representative  only  of  the  major 
product,  railway  carriage.  The  railway  business, 


148  WEALTH  AND  INCOME  OF 

however,  is  such  a  dominant  factor  in  transportation 
and  the  changes  have  been  so  great  that  there  seems 
to  be  no  doubt  of  the  steady  and  rapid  fall  in  shipping 
rates  during  the  last  half  of  the  nineteenth  century. 
This  stands  in  sharp  contrast  to  the  fluctuating  prices 
in  other  commodities  and  shows  mainly  the  greater 
increase  in  efficiency  of  the  railways  and  steamships 
as  compared  to  other  lines  of  industry.  While  the 
manufacturing  industries  are  turning  out  for  each 
inhabitant  five  times  the  product  that  they  did  in 
1850,  the  railways  and  ships  are  doing  even  better 
and  are  carrying  six  times  the  traffic  per  person  that 
they  did  in  1850.  Since  1870,  railway  workers  have 
succeeded  in  more  than  doubling  the  product  per 
man,  an  achievement  closely  paralleled  by  the 
workers  in  manufacturing.  While  the  increases  in 
output  are  similar,  Fig.  16  shows  that  a  worker  in 
transportation  is  much  more  productive  than  his 
comrade  engaged  in  manufacturing.  Does  this  indi- 
cate a  higher  degree  of  skill  or  is  there  some  other 
cause?  Again,  the  teachings  of  economic  theory  lead 
us  to  suspect  that  the  real  cause  for  the  difference 
lies  not  in  the  inherent  ability  of  the  laborer  but  in 
his  more  expensive  equipment;  that  is,  the  larger 
product  represents  the  more  important  role  played 
by  capital,  rather  than  greater  human  efficiency. 
On  page  27,  the  United  States  Census  Report  of  1904 
on  Wealth,  Debt,  and  Taxation  estimates  the  total 


THE  PEOPLE  OF  THE  UNITED  STATES   149 


value,  in  1899,  of  railway  property,  street  railways, 
canals,  and  ships  at  $11,248,500,000  or  approximately 
$10,425  per  employee,  or  more  than  five  times  the 
investment  per  employee  in  manufacturing.  It  is, 
therefore,  not  at  all  surprising  that,  with  so  much 
more  expensive  equipment,  the  product  per  man  is 
about  double  what  it  is  in  manufacturing. 

TABLE  XXVIII 


THE  ESTIMATED  CHANGES  IN  THE  TOTAL  PRODUCTION  AND  IN 

THE  PER  CAPITA  PRODUCTION  AND  SUPPLY  OP  MINERAL 

PRODUCTS  FOR  THE  CONTINENTAL  UNITED  STATES. 

Census 
Year. 

Total 
Value 
Pro- 
duced 
in  Mil- 
lions of 
Dol- 
lars.i 

Index  of 
Prices  of 
Mineral 
Prod- 
ucts.3 

Index  of 
Quantity  of 
Mineral 
Products.8 

Quantity 
of  Mineral 
Products 
Per  Capita 
for  Entire 
Popula- 
tion.* 

Persons 
Employed 
in  Mining 
in  Thou- 
sands.5 

Index  of 
Quantity 
Produced 
per  Person 
En  gaged  in 
Mining,  a 

1850 

23 

164.8 

14.0 

.60 

34 

412 

1860 

62 

144.2 

43.0 

1.37 

101 

426 

1870 

145 

232.2 

62.4 

1.62 

163 

383 

1880 

218 

135.9 

160.4 

3.20 

296 

542 

1890 

329 

109.2 

301.3 

4.79 

529 

570 

1900 

591 

109.8 

538.2 

7.08 

603 

892 

1910 

976 

127.0 

768.5 

8.36 

645 

1,191 

1  See  Table  XXIII. 

*  Simple  average  indices  of  prices  of  "Metals  and  implements" 
and  "Fuel  and  lighting,"  Bulletin  114,  United  States  Bureau  of  the 
Statistics  of  Labor,  p.  149;  Senate  Report  1394,  Part  1,  p.  99.     For 
year  preceding  the  Census  year. 

*  Millions  of  dollars'  worth  at  prices  of  1890-1899. 
4  Dollars'  worth  at  prices  of  1890-1899. 

6  Census  of  Mines  and  Quarries  for  1902,  p.  6. 
6  Dollars'  worth  at  prices  of  1890-1899. 


150 


WEALTH  AND  INCOME  OF 


The  productiveness  of  the  mines  is  set  forth  in 
Table  XXVIII.  The  increase  in  the  gross  product 
has  been  much  more  rapid  than  in  any  other  great 
field  of  industry  having  been  multiplied  by  fifty  in 
the  course  of  six  decades.  The  product  per  worker 
has  likewise  increased,  at  a  rate  somewhat  similar 
to  that  shown  by  manufacturing  and  transportation. 

TABLE  XXIX 


THE  ESTIMATED  CHANGES  IN  THE  TOTAL  PRODUCTION  AND  IN 
THE  PER  CAPITA  PRODUCTION  AND  SUPPLY  OP  AGRICULTURAL 
PRODUCTS  FOR  THE  CONTINENTAL  UNITED  STATES. 

Census 
Yewr. 

Total  Value 
Produced 
in  Millions 
of  Dollars.  1 

Index 
of 
Prices 
of 
Agri- 
cul- 
tural 
Pro- 
ducts.4 

Index  of 
Quantity 
of 
Agricul- 
tural Pro- 
ducts. 8 

Quantity 
of 
Agricul- 
tural Pro- 
ducts Per 
Capita  for 
Entire 
Popula- 
tion.* 

Persons 
Employed 
in 
Agriculture 
in 
Thousands.6 

Index  of 
Quantity 
Produced 
per  Per- 
son En- 
gaged in 
Agricul- 
ture.8 

1850 
1860 
1870 
1880 
1890 
1900 
1910 

764.9 
1,088.2 
1,783.2 
1,476.0 
2,260.0 
3,688.0 
6,842.0 

97.5 
119.8 
204.7 
114.9 
111.5 
100.0 
153.1 

784.5 
908.4 
871.2 
1,284.5 
2,027.0 
3,688.0 
4,469.0 

33.82 
28.89 
22.59 
25.61 
32.21 
48.54 
48.60 

2,4047 
3,3317 
5,949 
7,714 
8,566 
10,382 
11,389 

326 
273 
146 
167 
237 
355 
392 

1  See  Table  XXIII. 

z  For  year  preceding  census.  See  Bulletin  114  of  the  United 
States  Bureau  of  Labor  Statistics,  p.  149,  and  Senate  Report  1394, 
Part  1,  p.  107. 

*  Value  in  millions  of  dollars  at  prices  of  1890-1899. 

4  Dollars'  worth  per  capita  at  prices  of  1890-1899. 

1  United  States  Census  of  Occupations,  pp.  1-liii. 

8  Dollars'  worth  at  prices  of  1890-1899. 

7  Slaves  not  included. 


THE  PEOPLE  OF  THE  UNITED  STATES   151 

It  will  be  observed  from  Fig.  16  that  the  last 
decade  has  witnessed  a  decided  increase  in  the  quan- 
tity of  product  per  worker  in  the  mines,  while,  in  the 
other  fields  of  activity,  there  has  been  only  a  slight 
change  during  the  same  period.  The  reasons  for 
this  are  not  clear  but  the  probable  cause  is  the  de- 
cided improvements  in  mining  methods  brought  about 
by  the  more  general  introduction  of  power  machinery. 
According  to  the  statements  of  the  United  States 
Census,  the  reports  on  capital  invested  in  mines  have 
too  wide  a  margin  of  error  to  prove  of  great  value. 

FIGURE  17 

ESTIMATED  RETURNS  PER  CAPITA  FROM  DIFFERENT  FIELDS 
OF  INDUSTRY 

Measured  in  Dollars  Worth  at  Prices  of  1890-1899  for  the  Entire 
Population  of  the  Continental  United  States 

80 


Census  Y.eai; 


152  WEALTH  AND  INCOME  OF 

While  the  products  for  each  person  in  the  country 
have,  in  other  industries,  been  increasing  at  least 
five  times  in  amount,  Table  XXIX  shows  that  the 
per  capita  supply  of  agricultural  produce  has  less 
than  doubled  in  sixty  years.  This  accords  with  the 
well-known  economic  law  that,  as  income  increases, 
the  demand  for  food  increases  much  more  slowly. 
Our  wants  for  subsistence  are  comparatively  soon 
satisfied.  Under  these  circumstances,  any  large 
excess  of  agricultural  produce  would  have  little 
utility  at  home  and  so,  naturally,  would  be  exported — 
but  we  have  failed  to  find  the  raising  of  agricultural 
products  for  export  as  profitable  as  other  lines  of 
industry  and,  hence,  we  have  ceased  to  send  food- 
stuffs abroad  to  any  great  extent.  The  demand  for 
the  products  of  mines  and  factories  and  railways  is, 
for  all  practical  purposes,  limitless,  hence  it  is  natural 
that  the  expansion  of  industry  due  to  new  methods 
should  have  occurred  along  those  lines  rather  than 
in  the  increase  of  agricultural  produce. 

The  striking  thing  shown  by  the  last  column  of 
Table  XXIX  is  the  very  marked  diminution  in  the 
product  per  person  engaged  in  agriculture  which 
the  census  figures  indicate  took  place  between  1850 
and  1870.  It  is  possible  that  the  decrease  is  only 
apparent  and  is  due  to  imperfections  in  the  enumera- 
tion but  it  may,  in  part,  at  least,  be  otherwise  ac- 
counted for.  The  census  of  1850  and  1860  did  not 


THE  PEOPLE  OF  THE  UNITED  STATES   153 

include  slaves  as  persons  enumerated;  therefore,  the 
per  capita  product  in  the  South  would  represent  the 
output  of  a  freeman  assisted  by  whatever  slaves  he 
owned.  This  would  help  to  swell  the  average  product 
per  worker.  Furthermore,  the  industry  of  the  South 
was  disorganized  by  the  Civil  War;  the  negroes 
probably  did  not  prove  efficient  independent  farmers; 
and,  hence,  we  would  expect  the  product  per  man  to 
decrease  decidedly  before  1870.  While  these  reasons 
in  part  explain  the  falling  off  in  1870  and  1880  it 
seems  quite  possible  that  the  figures  computed  for 
those  two  years  are  somewhat  too  low. 


CHAPTER  VII 

THE  DISTRIBUTION  OF  THE  NATIONAL  INCOME 
AMONG  THE  FACTORS  OF  PRODUCTION 

IN  the  last  chapter,  we  studied  the  way  in  which  the 
great  river  of  national  income  is  produced  by  the 
various  industries.  Laborers,  capitalists,  landlords, 
and  entrepreneurs,  financiers,  economists,  and  states- 
men, all  plan  and  contrive  ways  and  means  of  in- 
creasing the  flow.  In  this  respect,  their  interests  are 
one.  When,  however,  it  comes  to  the  division  of 
this  bountiful  stream  into  the  branches  and  rivulets 
and  rills  that  go  to  each  class,  industry,  occupation, 
or  individual,  the  unity  of  interest  disappears  and 
each  group  is  likely  to  selfishly  seek  to  increase  its 
own  share  at  the  expense  of  the  others. 

It  is  evident  that  the  economic  welfare  of  the 
individuals  composing  each  group  or  class  will  de- 
pend upon  three  things:  first,  the  size  of  the  stream; 
second,  the  share  going  to  the  group  or  class;  third, 
the  number  of  persons  within  the  class  among  which 
the  share  is  to  be  divided.  Any  study,  then,  of  the 
relative  progress  of  any  segment  of  the  population 
involves  a  consideration  of  these  three  points. 

Economists  have  been  wont  to  divide  the  products 
of  industry  into  four  parts,  viz.  rent,  interest,  wages, 

154 


THE  PEOPLE  OF  THE  UNITED  STATES   155 

and  profits;  these  being  the  payments  for  the  services 
of  the  four  factors  of  production — land,  capital,  labor, 
and  the  entrepreneur,  respectively.  Some  economists 
have  disputed  the  advisability  of  this  division  but 
it  still  persists  and  is,  in  many  respects,  a  useful 
classification.  One  of  the  aims  of  this  chapter  will 
be  to  ascertain  what  share  of  the  income  is  actually 
received  by  each  of  these  factors.  Under  the  head 
of  rent,  we  shall  place  all  recompense  for  the  use  of 
natural  resources  but  none  of  the  hire  of  buildings  or 
improvements.  Wages  is  taken  broadly  to  include 
all  payments  to  employees  for  their  services,  whether 
they  work  for  $500  or  $50,000  per  year.  By  interest, 
is  understood  the  necessary  amounts  paid  in  order 
to  obtain  the  use  of  capital  goods,  and  capital  goods 
are  usually  defined  as  those  products  of  man's  efforts 
used  in  the  further  production  of  wealth.  Examples 
of  capital  goods  are  warehouses,  office  buildings, 
stores,  machines,  livestock,  raw  materials,  and  stocks 
of  merchandise.  Payments  for  the  use  of  any  of 
these  or  increases  in  their  value  due  to  holding  them 
until  the  time  when  needed  for  use  are  classed  as 
interest. 

The  term  profits  comprises  the  entire  share  which 
the  entrepreneur  receives  for  his  personal  efforts  in 
carrying  on  the  business  in  which  he  is  engaged.  It 
does  not  include  interest  on  the  capital  or  rent  for 
the  land  which  he  has  invested  in  the  enterprise  but 


156  WEALTH  AND  INCOME  OF 

does  cover  all  payments  for  his  own  services  whether 
physical  or  intellectual.  The  salary  which  he  could 
command  if  employed  by  others  is  commonly  known 
as  the  entrepreneur's  wage.  This,  together  with  all 
chance,  speculative,  or  monopoly  gains  is  compre- 
hended under  the  head  of  profits,  as  here  defined. 
For  instance,  after  a  farm  owner  has  charged  off  rent 
for  all  land  used,  wages  for  his  hired  hands  and  his 
children  who  help  him,  and  interest  for  all  capital 
goods  employed,  the  balance  of  his  net  earnings  con- 
sists of  profits. 

Information  is  far  too  limited  to  enable  us  to  make 
the  apportionment  between  these  four  shares  with 
any  great  degree  of  accuracy.  Fortunately,  we  have 
fairly  good  wage  statistics  covering  the  fields  of 
manufacturing,  mining,  and  railroading  and,  even 
in  agriculture,  statistics  of  moderate  quality  are 
available.  We  are,  therefore,  enabled  to  compute 
the  share  of  labor  with  a  fair  degree  of  certainty  that 
the  errors  are  of  slight  consequence;  and,  after  all, 
this  is  the  share  about  which  there  is  most  inquiry 
at  present. 

THE  SHARE  OF  LAND. 

Rent  has  been  estimated  as  a  percentage  of  the 
value  of  the  land.  This  involves  an  error  in  that  it 
fails  to  account  for  the  fact  that  land  value  represents 
the  total  present  worth  of  future  as  well  as  of  present 
rentals,  and  so  takes  account  of  increases  in  the  rent 


THE  PEOPLE  Of  THE  UNITED  STATES   157 

which  are  expected  to  occur  later.  In  a  new  country, 
where  steadily  rising  rents  are  normally  anticipated, 
the  value  of  land  is  considerably  greater  than  that 
obtained  by  capitalizing  the  present  rent  at  current 
interest  rates.  An  attempt  has  been  made  to  offset 
any  error  from  this  source  by  using  the  low  rate  of 
four  per  cent  of  the  value  as  an  estimate  of  the  rent 
of  the  land 

In  computing  the  share  of  interest,  the  rates  have 
been  taken  as  from  six  to  eight  per  cent  of  the  esti- 
mated value  of  existing  capital  goods.  Since  there 
is  no  uniformity  in  the  Census  reports  concerning  the 
things  classed  as  capital,  the  estimate  of  the  total 
value  of  capital  goods  is  necessarily  a  very  crude  one. 

The  remainder  of  the  total  product  has  been  entered 
under  the  head  of  profits.  The  author  realizes  that 
some  economists  would  prefer  to  class  monopoly 
gains  with  rent  but  it  was  not  feasible  to  do  so  in 
this  case,  even  if  such  a  course  were  desirable. 

To  sum  up,  it  is  believed  that  the  share  of  wages 
is  rather  accurately  set  apart,  that  the  share  of  rent 
is  close  enough  to  the  reality  to  answer  some  of  the 
questions  commonly  asked  about  it,  and  that  the 
division  of  the  remainder  of  the  total  net  product 
between  interest  and  profits,  though  admittedly  very 
inaccurate,  yet  is  as  close  to  the  facts  as  can  easily 
be  estimated  from  the  Census  material  and  indicates 
the  truth  in  a  broad  way.  The  general  estimates 


158 


WEALTH  AND  INCOME  OF 


appear  in  Table  XXX  and  the  salient  features  are 
brought  out  by  Fig.  18. 

TABLE  XXX 


THE  ESTIMATED  TOTAL  NATIONAL  INCOME  FOR  THE  CON- 
TINENTAL UNITED  STATES  DIVIDED  INTO  RENT,  INTEREST, 
PROFITS,  AND  RETURNS  TO  EMPLOYEES. 

CENSUS 
YEAR. 

AMOUNT  IN  MILLIONS  OF  DOLLARS.* 

PRICE 

INDEX.1 

Total. 

Wages  and 
Salaries.3 

Interest. 

Kent. 

Fronts. 

1850 
1860 
1870 
1880 
1890 
1900 
1910 

2,213.8 
3,635.6 
6,720  1 
7,390.7 
12,081  6 
17,964.5 
30,529  5 

792.8 
1,351  1 
3,269.5 
3,803.6 
6,461.8 
8,490.7 
14,303.6 

2765 
532.6 
864.5 
1,373.2 
1,738.9 
2,695.7 
5,143.9 

170.6 
321.2 
463.2 
642.3 
913.8 
1,396.0 
2,673.9 

973.9 
1,430.7 
2,122.9 
1,571  6 
2,967.1 
5,382.1 
8,408.1 

139.2 
141.3 
221.6 
132.4 
113.6 
101.7 
126.5 

CENSUS 
YEAR 

PURCHASING  POWER,  BASE,  1890-1899. 

Total. 

Wages  and 
Salaries. 

Interest. 

Kent. 

Profits. 

1850 
1860 
1870 
1880 
1890 
1900 
1910 

1,590.5 
2,572.8 
3,032.4 
5,582.3 
10,635.5 
17,665.9 
24,137.0 

569.6 
956.2 
1,475.3 
2,873.0 
5,688.2 
8,349.6 
11,309.9 

198.6 
376.9 
390.1 
1,037.2 
1,530.9 
2,650.9 
4,066.4 

122.6 
227.3 
209.0 
485.1 
804.4 
1,372.9 
2,1138 

699.7 
1,012.4 
958.0 
1,187.0 
2,612.0 
5,292.5 
6,646.9 

1  Wholesale  prices  for  year  preceding  the  census.     Bulletin 
114  of  the  United  States  Bureau  of  Labor  Statistics,  p.  149. 

2  The  figures  for  wages  and  salaries  are  believed  to  be  fairly 
accurate;  those  for  rent  are  thought  to  have  an  error  of  not  more 
than  twenty  per  cent.    The  separation  of  the  share  of  capital 
from  that  of  the  entrepreneur  is  very  crudely  done  and  no  stress 
should  be  laid  on  the  results.     The  total  for  all  shares  is  thought 
to  be  more  accurate  than  the  mode  of  distribution  and,  for  the 


THE  PEOPLE  OF  THE  UNITED  STATES        159 

FIGURE  18 

ESTIMATED  DISTRIBUTION  OF  THE  NATIONAL  INCOME  FOR  THE 

CONTINENTAL  UNITED  STATES  AMONG  THE  FACTORS 

OF  PRODUCTION 


Interest 


Rent 


Census  Year 

last  three  census  years,  should  come  within  ten  per  cent  of  the 
correct  statement  of  the  national  income.  For  earlier  years, 
the  error  should  not  be  over  twenty  per  cent  at  the  outside. 

3  Wages  and  salaries  were  independently  estimated,  also,  by 
the  method  of  multiplying  the  estimated  number  employed  bythe 
average  wage  received.  The  variations  for  the  different  years 
between  the  respective  results  of  the  different  methods  are  as 
follows: — 1850 — 4  per  cent;  1860 — 5  percent;  1870 — 5  per  cent; 
1880 — 7  per  cent;  1890 — 1  per  cent;  1900 — 2  per  cent,  showing 
the  improving  accuracy  of  recent  figures. 


160 


WEALTH  AND  INCOME  OF 


But,  after  all,  absolute  figures  are  of  but  little  in- 
terest to  most  of  us.  Fig.  18  shows  that  all  the  shares 
have  greatly  increased;  but  we  have  known  that  al- 
ready. Which  has  been  gaining  at  the  expense  of  the 
others?  Which  has  been  losing  out  in  the  race?  The 
answer  to  these  questions  is  presented  in  Table  XXXI 
and  Fig.  19. 

TABLE  XXXI 


THE  ESTIMATED    PERCENTAGES  OF  THE  TOTAL  NATIONAL 

INCOME    RECEIVED    RESPECTIVELY   BY   LABOB,  CAPITAL, 

LAND,  AND  THE  ENTREPRENEUR. 

SHARES  OP  PBODucr.1 

CENSUS 
YEAB. 

Wages  and 
Salaries. 

Interest. 

Bent 

Profits. 

Total 

1850 

35.8 

12.5 

7.7 

44.0 

100.0 

1860 

37.2 

14.7 

8.8 

39.3 

100.0 

1870 

48.6 

12.9 

6.9 

31.6 

100.0 

1880 

51.5 

18.6 

8.7 

21.3 

100.1 

1890 

53.5 

14.4 

7.6 

24.6 

100.1 

1900 

47.3 

15.0 

7.8 

30.0 

100.1 

1910 

46.9 

16.8 

8.8 

27.5 

100.0 

The  single  taxer  has  told  us  that  all  the  improve- 
ments of  industry  result  only  in  the  enrichment  of 
the  landlord.  A  glance  at  Table  XXX  shows  us  how 
absurd  this  statement  is.  The  value  of  our  products 
has  increased  since  1850  to  the  extent  of  some  twenty 
eight  billions  of  dollars  while  rent  has  gained  less 
than  three  billions.  Evidently,  it  has  captured  but  a 
very  meager  part  of  the  new  production.  In  fact,  it 

1  Computed  from  Table  XXX. 


THE  PEOPLE  OF  THE  UNITED  STATES        161 

FIGURE  19 

ESTIMATED  RELATIVE  SHARES  OF  THE  DIFFERENT  FACTORS  OP 

PRODUCTION  IN  THE  NATIONAL  INCOME  FOR  THE 

^CONTINENTAL  UNITED  STATES 


Census  Years. 

has  only  tended  to  keep  its  constant  share  of  the 
output,  the  percentage  being  the  same  in  1860  as 
in  1910.  As  a  matter  of  fact,  the  indications  are 
that  rent  plays  a  much  less  important  role  in  distri- 
bution than  the  followers  of  Henry  George  would 
have  us  believe.  It  is  interesting,  in  this  connection, 
to  note  the  relative  size  of  the  rent  item  and  the 
expenses  of  government.  Reference  to  Tables  XXV 
and  XXX  shows  us  that,  before  the  Civil  War,  the 
rent  bill  was  large  enough  to  pay  all  governmental 
charges  nearly  twice  over.  In  1910,  however,  the 
12 


162  WEALTH  AND  INCOME  OF 

rent  would  have  been  barely  sufficient  to  pay  off  the 
various  governmental  budgets  as  at  present  con- 
stituted and,  with  the  growing  concentration  of 
activities  in  the  hands  of  government,  it  appears 
that  rent  will  soon  be  a  quantity  far  too  small  to 
meet  the  required  charges.  With  increasing  pressure 
on  our  natural  resources,  however,  it  is  probable  that 
the  percentage  of  the  total  income  paid  for  rent 
will  gradually  increase  and,  since  this  is  true,  the  lag 
behind  the  growing  governmental  expenses  will  be 
considerably  less  than  would  otherwise  be  the  case. 

THE  SHARES  OF  CAPITAL  AND  THE  ENTREPRENEUR 
The  combined  share  of  interest  and  profits  showed  a 
striking  decline  between  1860  and  1870  and  has 
since  tended  to  remain  practically  constant.  The 
decline  was  probably  largely  a  result  of  the  freeing 
of  the  slaves  and  the  destruction  of  capital  due  to 
the  Civil  War.  When  the  slaves  were  largely  trans- 
formed into  wage  earners,  the  natural  outcome  was  a 
large  increase  in  the  wages  bill  at  the  expense  of 
interest  and  profits,  The  industry  of  the  South  was 
so  disorganized  by  the  conflict  that  it  took  a  number 
of  years  for  business  to  get  on  its  feet  again;  hence, 
the  share  of  profits  and  interest  was  cut  down  even 
further  though  this  effect  was  partially  offset  by  the 
higher  interest  rates  prevailing  for  the  capital  which 
escaped  destruction. 


THE  PEOPLE  OF  THE  UNITED  STATES   163 

THE  SHARE  OF  LABOR 

Since  rent  has  constituted  a  share  relatively  sta- 
tionary and  comparatively  unimportant  in  amount, 
wages  have  been  practically  the  complement  of  the 
combined  factors  of  interest  and  profits.  The  great 
rise  of  the  share  of  wages  during  the  decade  1860  to 
1870  has  therefore  just  been  accounted  for  in  ex- 
plaining the  fall  of  interest  and  profits.  It  will  be 
noted  that  the  rise  in  the  percentage  received  by 
wages  continued  slowly  until  1890  and  has  since 
been  gradually  declining.  Is  there  any  logical  ex- 
planation of  this  change? 

Statistical  studies  of  the  fraction  of  the  total 
income  going  to  wages  are  so  rare  that  few  if  any 
laws  on  this  score  have  yet  been  inductively  formu- 
lated. Economists  are  not  even  united  upon  any 
deductive  theory  for  this  case.  Any  reasons  assigned, 
therefore,  must  be  purely  hypothetical.  The  most 
probable  causes  for  the  decline  of  the  last  two  decades 
are  perhaps  the  disappearance  of  free  land,  with  the 
attendant  increase  in  the  pressure  upon  our  natural 
resources,  and  the  great  influx  from  abroad  of  labor 
of  a  low  degree  of  efficiency.  Whether  these  are  or 
are  not  the  correct  explanations  of  the  changing 
trend,  the  fact  remains  that  the  total  share  going 
to  labor  has,  of  recent  years,  been  falling  off  despite 
the  efforts  of  labor  unions  and  combinations.  It  still 
remains  a  mooted  question  whether  any  labor  organi- 


164  WEALTH  AND  INCOME  OF 

zation  not  monopolizing  practically  the  whole  wage 
earning  class  can,  through  combination,  cause  a  larger 
share  of  the  total  national  income  to  be  paid  as  wages 
than  would  fall  to  the  lot  of  labor  under  a  regime 
of  free  competition. 

It  is  the  worker's  share  of  the  product  which 
seems  to  appeal  most  to  the  imagination  of  present 
day  writers.  This  is  the  period  in  which  "down- 
trodden labor"  is  at  least  coming  to  have  its  impor- 
tance recognized.  But  the  question  of  primary 
importance  is  not  how  much  does  labor  as  a  whole 
receive  but  how  much,  on  the  average,  does  each 
laborer  get.  Is  the  worker  being  treated  justly? 
Does  the  unskilled  toiler  receive  a  fair  living  wage? 
If  not,  how  can  his  condition  be  bettered? 

And  these  queries  are  rightly  considered  of  the 
first  importance.  The  overwhelming  majority  of 
our  population  are  dependent  primarily  upon  wages 
for  their  income  and,  therefore,  the  economic  welfare 
of  the  nation  is  largely  synonymous  with  the  wages 
of  the  working  people  measured  in  purchasing  power; 
in  other  words,  it  depends  upon  the  extent  to  which 
the  money  wages  received  are  adequate  to  furnish  the 
necessities  and  customary  luxuries  of  life. 

But  nothing  is  more  futile  than  the  denunciation 
of  the  employers  as  a  wicked  and  heartless  class 
because  they  refuse  to  pay  higher  wages.  The  em- 
ployer is  the  slave  of  existing  competitive  conditions. 


THE  PEOPLE  OF  THE  UNITED  STATES   165 

In  the  established  and  better  understood  industries, 
he  cannot  long  pay  higher  wages  for  the  same  grade 
of  labor  than  do  his  competitors  or  he  will  soon  be 
forced  to  the  wall.  But  these  competitive  conditions 
may  be  changed.  They  are  the  results  of  law  and 
custom  and  society  can,  by  legal  enactment,  largely 
revolutionize  them  at  its  pleasure.  Suppose,  that, 
by  radical  legislative  changes,  the  largest  possible 
fraction  of  the  national  dividend  was  diverted  to 
the  share  of  wages.  How  would  it  affect  the  wage 
earners? 

In  1910,  the  wages  bill  of  the  nation  was  approxi- 
mately $14,303,600,000.  It  is  possible  that  the 
government  might  tax  away  all  rent  and  turn  the 
proceeds  to  the  benefit  of  labor.  Interest  cannot  be 
decreased  without  resulting  in  a  loss  of  saving; 
hence,  the  interest  bill  could  scarcely  be  lessened 
without  destructive  effects  to  the  capital  supply  of 
the  country,  thus  ruining  our  industries.  Nothing, 
therefore,  could  be  gained  from  that  source.  Average 
profits,  as  will  be  seen  by  reference  to  Table  XXXII, 
are  only  about  half  as  large  again  as  average  wages. 
We  could  not  get  the  services  of  entrepreneurs  for 
nothing  and  it  must  be  conceded  that  the  farmers 
and  planters  and  business  men,  as  a  rule,  rank  higher 
in  efficiency  than  does  the  average  employee;  there- 
fore, these  entrepreneurs  must  necessarily  be  paid 
somewhat  more  than  the  average  wage  of  the  latter. 


166  WEALTH  AND  INCOME  OF 

Suppose,  that,  as  the  maximum  possible  allowance, 
we  took  one  fourth  of  all  profits  and  diverted  those 
also  to  the  benefit  of  the  employees.  The  total 
allowance  for  wages  and  salaries  would  now  amount 
to  about  $19,079,500,000,  or  a  gain  of  almost  exactly 
one  third  over  and  above  the  present  payments  for 
labor. 

But  not  nearly  all  of  this  one  third  addition  would 
be  a  gain  to  the  income  of  the  employed  classes,  for 
very  many  employees  own  land  and  derive  a  con- 
siderable fraction  of  their  income  from  its  rent.  The 
commonest  example  of  this  is  the  case  of  home- 
owners who  enjoy  the  services  of  the  land  on  which 
their  residence  stands.  Many  others  receive  rent 
and  profits  indirectly  through  the  ownership  of  the 
stocks  or  bonds  of  corporations.  A  few  obtain 
profits  through  business  ventures  of  their  own.  For 
these  employees,  the  transfer  of  rent  and  profits  to 
the  wages  fund  means  taking  money  out  of  one  pocket 
and  transferring  it  to  another,  though  the  amount 
lost  might  be  greater  or  less  than  that  gained.  Thus, 
it  would  seem  improbable  that,  with  our  present 
national  productive  power,  any  feasible  system  of 
distribution  could  increase  the  average  wage  earner's 
income  in  purchasing  power  by  more  than  one  fourth 
and  this  is  an  extreme  rather  than  a  moderate  esti- 
mate. While  such  a  change  might  or  might  not  be 
desirable,  it  would,  at  least,  work  no  startling  revo- 


THE  PEOPLE  OF  THE  UNITED  STATES   167 

lution  in  the  condition  of  the  employees  of  the  United 
States.  The  grim  fact  remains  that  the  quantity 
of  goods  turned  out  absolutely  limits  the  income  of 
labor  and  that  no  reform  will  bring  universal  pros- 
perity which  is  not  based  fundamentally  upon  in- 
creasing the  national  income.  After  all,  the  Classical 
Economists  were  right  in  emphasizing  the  side  of 
production  in  contradistinction  to  that  of  distribution. 
Nature  refuses  to  yield  her  bounty  except  in  return 
for  effort  expended.  Demands  for  higher  wages 
have  never  yet  unlocked  her  storehouses. 

We  have  talked  about  the  possibilities,  through  a 
new  system  of  distribution,  of  increasing  the  income 
of  the  laboring  classes.  We  have  observed  that  labor 
has  been  fairly  successful  in  retaining  about  a  half 
of  the  total  product,  but  this  tells  us  nothing  about 
the  portion  going  to  each  individual  and  the  last  is  a 
question  of  vastly  more  importance  than  the  study 
of  the  share  obtained  by  labor  en  masse.  Has  the 
compensation  for  the  efforts  of  the  average  laborer 
increased  as  fast  as  should  be  the  case  considering 
the  tremendous  improvements  in  industrial  pro- 
cesses? Has  the  entrepreneur  distanced  the  em- 
ployee in  the  race,  constantly  securing  the  lion's 
share  of  the  added  spoils?  Some  light  will  be  thrown 
upon  these  questions  by  reference  to  Table  XXXII 
and  Fig.  20. 

The  fact  should  be  emphasized  that  the  distinction 


168 


WEALTH  AND  INCOME  OF 


between  employees  and  independent  entrepreneurs 
is  very  far  from  being  definitely  ascertainable  from 
the  Census  tables,  and,  as  a  result,  the  figures  cited 
in  Table  XXXIIa  of  the  Appendix  must  be  taken 
as  mere  approximations.  They  only  represent  an 
attempt  to  apportion'  as  accurately  as  possible  the 
total  number  of  persons  in  the  United  States  reported 
by  the  Census  as  gainfully  employed.  Columns  four 

TABLE  XXXII 


THE  ESTIMATED  RETURNS  FOR  PERSONAL  EFFORTS  IN  THE 

CONTINENTAL  UNITED  STATES. 

8 

a-1* 

y 

fr-i 

v  £•* 

a  a  ^ 

^a 

£ 

&>a  § 

li* 

| 

'1- 

|*| 

"3  0  "f 

|«| 

b| 

fsj 

^|| 

Pi 

-2^1 
<ngo, 
BJM 

1 

1* 

111 

h-""* 

|i§ 
-  >> 

bo      £i< 
E  be 

O   OS   4> 

pl-2 

pi 

s  I  i 

CL  g  g 

8,g-'S 

° 

1 

S*S 

«H 

"3. 

•<J  W 

' 

1  ' 

$£i 

V  S  2 

•«^    fi 

1850 

139.2 

792.8 

3,880 

$204 

147 

973.9 

2,200 

443 

318 

1860 

141.3 

1,351.1 

5,090 

265 

188 

1,430.7 

3,150 

454 

321 

1870 

221.6 

3,269.5 

8,240 

397 

179 

2,122.9 

4,270 

497 

224 

1880 

132.4 

3,803.6 

11,790 

323 

244 

1,571.6 

5,600 

281 

212 

1890 

113.6 

6,461.8 

16,220 

398 

350 

2,967.1 

7,100 

418 

368 

1900 

101.7 

8,490.7 

20,350 

417 

410 

5,382.1 

8,720 

617 

607 

1910 

126.5  14,303.6  28,200 

507 

401 

8,408.1 

9,350 

899 

711 

1  United  States  Bureau  of  Labor  wholesale  price  index  for 
year  preceding  the  Census. 

2  See  Table  XXX. 

8  See  Table  XXXIIa  in  the  appendix. 

4  Purchasing  power  of  the  money  wage  at  the  prices  of  1890- 
1899. 

6  Purchasing  power  of  the  money  profits  at  the  prices  of 
1890-1899. 


THE  PEOPLE  OF  THE  UNITED  STATES        169 


FIGURE  20 

ESTIMATED  AVERAGE  ANNUAL  RETURN  TO  ENTREPRENEURS 

AND  EMPLOYEES1 

Measured  in  both  Money  and  Purchasing  Power. 
Base  1890-1899 


900 
800 

700 
000 

500 
.400 

I300 
>> 

|aoo 

i 

100 
0 

A     3 
B    ] 
0     1 
D    1 

E     1 

Honey  Profits  Per  JSnt 
'urchasing  Power  of  P 
if  oney  Wages  Per  Jimp 
'urchastng  Power  of  W 
jevel  of  Wholesale  Pr 

repreneur  Per.  Annum 
rofits  Per  Ent'r  Per  A 
loyee  Per  Annum 
ages  Per  Employee  i> 
ces 

/ 

1U 

X 

^X 

X 

7 

— 

LA_ 

-—  ' 

"^" 

\ 

xX 

^= 

^ 

E=-=M 

B 

X 

""^ 

s^ 

<x«»^5 

^ 

^ 

^ 

^ 

=-^ 

*E~" 



__^_ 

= 

9MKMJ 

->  

•           •* 

Census  Teas. 

and  eight  in  Table  XXXII  are  taken  from  Table 
XXXIIa.  The  fact  has  already  been  noted  that 
column  seven,  denoting  total  profits,  is  a  rough 
approximation  only.  The  methods  of  estimation, 
however,  were  such  as  to  cause  the  errors  to  be  some- 
what similar  in  percentage  and  direction  from  year 
to  year  and,  as  a  result,  the  general  tendencies  shown 
should  not  be  very  far  from  the  truth. 

1  Calculated  from  the  United  States  Census  Reports  for  the 
Continental  United  States. 


170  WEALTH  AND  INCOME  OF 

Both  money  wages  and  money  profits  have  been 
reduced  to  a  basis  of  purchasing  power  by  dividing 
by  the  price  indices  for  the  respective  years.  The 
result  represents  the  dollars'  worth  of  commodities 
which  could  be  bought  with  current  money  receipts 
if  prices  had  remained  constant  at  the  average  level 
prevailing  from  1890  to  1899,  the  base  used  through- 
out by  the  United  States  Bureau  of  Labor.  Again, 
we  have  been  compelled  to  use  the  index  of  whole- 
sale instead  of  retail  prices  but  it  is  believed  that 
the  errors  arising  from  this  substitution  are  not  great 
enough  to  be  of  material  importance. 

The  first  thing  noticed  about  the  course  of  the  pur- 
chasing power  of  average  profits  is  the  great  decline 
during  the  Civil  War  period.  This  was  doubtless  due 
to  the  freeing  of  the  slaves  and  the  general  paralysis  of 
Southern  industry.  By  1870,  a  great  number  of  pov- 
erty-stricken negroes  were  beginning  to  farm  for  them- 
selves and  their  scant  gains  would  still  further  reduce 
the  average  of  profits.  The  slight  decline  shown  for 
the  next  decade  is  probably  due  to  the  business  de- 
pression prevailing  in  1879,  the  year  to  which  the 
census  figures  for  1880  really  apply.  From  1880  to 
1900  average  profits  increased  enormously,  almost 
trebling  in  amount  and  far  outstripping  average 
wages  in  purchasing  power.  It  must,  however,  be 
remembered  that,  in  1880,  profits  were  far  below 
normal  for  it  is  almost  inconceivable  that  it  would 


THE  PEOPLE  OF  THE  UNITED  STATES   171 

be  possible  to  continuously  secure  the  services  of 
entrepreneurs  at  a  lower  rate  than  that  paid  for 
employees.  For  fifty  years,  the  general  trend  of 
wages  and  profits  has  been  upward,  and  at  about 
the  same  rate,  with  profits  per  man  normally  standing 
at  perhaps  fifty  or  sixty  per  cent  more  than  the 
average  amount  paid  to  employees.  This  does  not 
indicate  that  entrepreneurs,  in  general,  are  grossly 
overpaid  for  their  aid  in  the  process  of  production. 
Some  of  the  great  captains  of  industry  undoubtedly 
secure  princely  incomes  as  a  reward  for  their  personal 
efforts  but  they  are  far  from  typical.  Most  entre- 
preneurs are  farmers,  small  merchants,  or  shop 
keepers,  hotel  proprietors,  and  the  like,  and,  if  the 
incomes  from  their  investments  in  land  and  capital 
are  subtracted  from  their  net  gains  for  the  year,  the 
few  hundred  dollars  remaining  for  each  man  can 
scarcely  be  pictured  as  the  reward  of  a  plutocrat. 

It  will  be  noted  that  the  fluctuations  of  wages  in 
purchasing  power,  as  shown  by  graph  D  in  Fig.  20, 
are  much  less  violent  than  the  changes  in  profits. 
It  is  the  entrepreneur  who  takes  the  risks  of  industry. 
He  is  the  buffer  who  withstands  the  shocks  of  business 
depression  and  panic.  The  workingman's  wage, 
therefore,  receives  a  degree  of  protection  by  no  means 
accorded  to  the  recompense  of  his  employer. 

Throughout  the  half  century,  the  earnings,  measured 
in  commodities,  of  the  average  employee  showed  a 


172  WEALTH  AND  INCOME  OF 

most  gratifying  increase,  practically  trebling  in  the 
five  decades.  Even  the  depression,  caused  by  the  great 
monetary  expansion  and  the  consequent  high  prices  of 
the  Civil  War  period,  was  almost  overcome  by  1869 
and,  from  that  date  on,  each  decade  marked  a  striking 
advance. 

The  Census  figures  represent  total  wages  paid  for 
the  year.  The  picture  which  they  give,  then,  is 
indicative  of  the  general  rise  in  the  laborer's  greatest 
source  of  income — his  wages.  As  far  as  representing 
the  prosperity  of  the  worker  is  concerned,  yearly 
earnings  are  better  than  a  record  of  daily  or  monthly 
wages,  for  the  annual  wage  takes  full  account  of  the 
fact  that  he  may  have  been  unemployed  much  or  little 
during  the  year  while  daily  or  hourly  wage  statistics 
tell  us  nothing  whatever  in  this  respect.  The  well 
being  of  the  laboring  class  is,  therefore,  far  more 
dependent  upon  the  total  wage  for  the  year  than 
upon  the  hourly  pay  received. 

While  the  earnings  of  the  chief  wage  earner  con- 
stitute the  largest  item  in  the  income  of  the  typical 
workingman's  family,  we  must  avoid  the  error  too 
frequently  made  of  supposing  this  amount  to  be 
practically  synonymous  with  the  total  family  in- 
come. In  the  case  of  small  families,  it  is  true  that 
there  may  be  no  other  receipts  than  the  wages  of  the 
head  of  the  family  but,  as  families  increase  in  size, 
it  is  the  general  rule  that  the  income  is  enlarged 


THE  PEOPLE  OF  THE  UNITED  STATES  J  173 

through  the  efforts  of  the  wife  or  children.  The 
wife  sometimes  goes  out  as  a  wage-earner  but,  more 
commonly,  she  keeps  roomers  or  boarders  or  takes  in 
sewing  or  washing.  The  children  very  frequently 
secure  work  which,  while  generally  poorly  paid,  aids 
materially  in  keeping  the  wolf  from  the  door  Be- 
sides, it  must  never  be  forgotten  that  a  considerable 
minority  of  American  skilled  workers  possess  property 
the  income  from  which  is  sufficient  to  supplement 
materially  the  wages  received.  Nevertheless,  for 
the  great  majority  of  the  laboring  class,  the  height  of 
wages  in  purchasing  power  is  the  fundamental 
determinant  of  economic  well  being. 

The  steady  and  rapid  rise  of  the  line  picturing  the 
average  annual  purchasing  power  of  employees 
represents  an  epoch-making  event  of  history.  The 
period  1850-1900  saw  that  come  to  pass  in  the 
United  States  which  the  English  economists  of  the 
earlier  nineteenth  century  deemed  impossible — the 
improvement  of  the  workingman's  economic  welfare 
to  the  extent  that  he  was  lifted  out  of  the  conditions 
formerly  thought  inseparable  from  a  working  life. 
He  tasted  the  cup  of  learning;  he  experienced  the 
joys  of  leisure  and  entertainment;  and  he  so  limited 
the  size  of  his  family  as  to  enable  his  children  to  con- 
tinue to  secure  these  advantages.  Larger  income  and 
more  learning  naturally  brought  more  power  and 
secured  more  respect.  The  army  of  labor  became  an 
ally  to  be  courted  or  any  enemy  to  be  feared. 


174  WEALTH  AND  INCOME  OF 

True,  a  rise  in  the  average  earnings  of  labor  does 
not  mean  that  all  workers  participate  equally  therein. 
Many  may  be  near  the  starvation  border  even  though 
the  masses  are  living  in  comfort.  But,  nevertheless, 
this  great  rise  in  the  general  income  pointed  to  a 
roseate  future.  With  American  inventive  genius  at 
its  height,  with  great  stores  of  natural  resources  still 
but  slightly  drawn  upon,  the  close  of  the  nineteenth 
century  gave  great  promise  to  labor  of  halcyon  days 
ahead.  It  appeared  that  in  this  new  era  of  pros- 
perity, labor  would  command  a  reward  so  rich  that 
it  would  be  easy  to  provide  for  misfortune  or  old 
age.  The  seven  hour  day  would  give  abundance  of 
opportunity  for  recreation  and  mental  culture.  The 
high  earnings  would  render  possible  the  common  use 
of  many  articles  heretofore  regarded  as  rare  luxuries. 
Poverty  and  want  would  all  but  disappear  and,  under 
these  new  conditions,  it  was  hoped  that  crime,  too, 
would  be  greatly  diminished  and  contentment  and 
happiness  would  rule  to  a  degree  never  before  known 
to  the  human  race.  All  this  was  portended  by  the 
unwavering  rise  of  the  purchasing  power  of  labor. 

Never  before  in  the  history  of  mankind  had  human 
toil  been  so  richly  rewarded — never  before  had  the 
empty-handed  workman  been  able  to  secure  so  large 
a  return  for  his  efforts.  But  accumulated  wealth 
has  always  attracted  the  surrounding  robber  bands — 
the  chance  for  easy  winnings  has  invariably  brought 


THE  PEOPLE  OF  THE  UNITED  STATES       175 

the  mad  rush  of  fortune  hunters.  When  Rome  grew 
rich,  the  Goths  massed  in  hungry  hordes  along  her 
borders  gazing  with  greedy  eyes  upon  her  fair  fields 
and  rich  cities  and,  at  last,  overpowering  the  de- 
fenders, the  barbarians  rushed  over  their  prostrate 
forms  and  seized  upon  the  plunder. 

And  so,  the  dawn  of  the  twentieth  century  saw  the 
spoilers  gazing  longingly  from  east  and  west  at  the 
riches  wrested  by  American  brawn  and  brains  from 
the  grasp  of  Nature.  The  advance  guard  of  the 
Asiatics  reached  our  Pacific  coast  but  the  forces  of 
labor  organized  against  the  "Yellow  Peril"  and 
successfully  repelled  the  invasion.  But  into  our 
Atlantic  ports,  unresisted  and  almost  unheeded, 
poured,  at  the  same  time,  another  army  of  invaders, 
the  "White  Peril"  from  southern  and  eastern  Europe. 
And  still  it  comes!  Its  advance  is  marked  by  no 
waving  banners,  no  rattle  of  musketry,  and  no  boom 
of  artillery,  but  the  army  streams  in  company  by 
company,  regiment  by  regiment,  brigade  by  brigade, 
and  division  by  division.  It  is  a  peaceful  army  and 
it  is  composed  of  millions  of  steady,  hard-working 
soldiers  of  industry.  They  do  not  ruthlessly  pillage 
the  land  as  did  the  Goths  the  valleys  of  Italy.  On 
the  other  hand,  they  toil  willingly  and  patiently  at 
the  hardest  tasks  set  for  them  in  our  mines  and 
factories.  Individually,  many  of  them  are  noble 
men  and  women,  worthy  of  our  highest  respect, 


176  WEALTH  AND  INCOME  OF 

and  we,  who  are  the  sons  or  grandsons  of  immigrants, 
should  be  the  last,  by  word  or  deed,  to  cast  aspersions 
upon  the  character  of  the  new  comers.  Those  whom 
we  have  welcomed  to  our  shores  should  receive  full 
respect  and  every  courtesy  which  we  would  have 
accorded  to  us  did  we  seek  our  fortunes  in  a  strange 
land. 

But,  after  all,  the  law  of  diminishing  returns  is 
inexorable.  Every  farmer's  boy  knows  that,  after  a 
certain  point  is  reached,  doubling  the  work  on  a  corn- 
field will  not  double  the  yield.  He  knows,  too,  that 
if  his  father  were  to  divide  his  farm  with  two  other 
families  that  it  would  mean  hard  times  for  all  of 
them.  And  so  it  is  with  the  nation  as  a  whole.  As 
more  and  more  people  crowd  upon  our  soil,  each 
one  must  have  less  and  less  resources  with  which  to 
work,  less  and  less  help  from  Nature  in  making  a 
living.  After  a  certain  density  is  reached,  therefore, 
more  population  means  more  poverty  for  someone. 
Inventions  and  discoveries  may  postpone  but  they 
cannot  avert  the  day  of  reckoning.  It  is  not  a 
question  as  to  the  quality  of  the  new-comers. 
Granted  that  they  are  the  equals  in  physique  and 
character  and  intelligence  of  any  of  their  predecessors, 
their  arrival  means  that  there  are  more  mouths  to 
share  the  food  from  the  fields,  more  bodies  to  be 
clothed  with  the  wool  from  the  plains  country. 

And  the   oncoming  host   is   made   up   mainly   of 


THE  PEOPLE  OF  THE  UNITED  STATES        177 

unskilled  laborers.  This  means  that  the  brunt  of 
the  burden  of  their  support  will  fall  not  upon  the 
property  owner,  not  upon  the  technical  expert,  but 
upon  him  who  is  least  able  to  bear  the  load — the 
common  laborer  of  the  United  States.  By  this 
invading  army,  then,  the  American  workingman  is 
despoiled  of  his  heritage  just  as  surely  and  truly  as 
were  the  peasants  of  old  Italy.  Our  priceless  natural 
resources  must  be  used  to  feed  the  sons  and  daughters 
of  other  lands.  The  marvellous  inventions  which 
should  ease  the  toil  of  the  American  laborer  must  be 
utilized  to  their  capacity  to  satisfy  the  hungry 
millions  of  Europe.  The  low  standard  of  the  Old 
World  tends  to  force  itself  upon  the  New  and  turn 
back  the  tide  of  progress. 

Since  1880,  the  average  profits  of  the  entrepreneur, 
as  measured  in  purchasing  power,  have  risen  steadily 
and  rapidly.  Line  B  in  Fig.  20  shows  no  change  in 
this  respect  during  the  last  decade.  There  has  been 
no  great  influx  of  foreign  business  men  to  cut  the 
returns  for  enterprise  closer  and  closer  to  the  borders 
of  starvation.  Therefore,  the  course  of  profits  has 
been  left  free  to  respond  to  the  great  improvements  in 
our  industrial  organization  resulting  from  American 
inventive  genius. 

But  the  sixth  column  of  Table  XXXII,  as  illus- 
trated by  graph  D  in  Fig.  20,  shows  that  the  American 
laborer  has  been  unable  to  withstand  the  continuous 
13 


178  WEALTH  AND  INCOME  OF 

onslaught  of  the  alien  hosts  and  that  he  has  been 
forced  to  yield  all  the  advantages  derived  from 
the  economic  progress  during  the  decade  and  to 
content  himself  with  a  slightly  lower  commodity 
wage  than  he  received  in  1900.  It  is  possible,  how- 
ever, that  the  seeming  decline  in  the  purchasing 
power  of  his  wages  is  due  to  faulty  computation  of 
the  gross  wage  bill  of  the  United  States  or  of  the  total 
number  of  employees.  It  is,  therefore,  advisable  to 
compare  this  general  result  with  the  more  detailed 
returns  for  separate  fields  of  industry. 

In  manufacturing,  the  average  annual  money 
earnings  per  employee  increased  during  the  period 
1899  to  1909  from  $471  to  $590,  a  rise  of  25  per  cent.1 
These  are  the  Census  figures  and  are  believed  to  be 
fairly  accurate.  Between  1902  and  1909,  the  Census 
shows  a  marked  decrease  in  the  average  earnings  per 
miner.  The  Census  of  mines  for  1902  was,  apparently, 
much  less  accurate  than  the  Census  of  manufactures 
of  three  years  before.  It  is  probable,  therefore,  that 
the  reported  decrease  in  the  annual  earnings  was 
erroneous,  so  we  shall  omit  these  figures  from  con- 
sideration. The  reports  of  the  Interstate  Commerce 
Commission  show  that  the  average  annual  compen- 
sation for  railway  employees  rose  from  $563  in  1899 
to  $658  in  1909 — a  gain  of  nearly  17  per  cent.2  These 

1  Abstract  of  the  United  States  Census  for  1910,  p.  438. 
*  Statistics  of  Railways  in  the  United  States,  1899,  pp.  39, 49,  and 
the  Statistical  Abstract  of  the  United  States  for  1912,  pp.  309-310. 


THE  PEOPLE  OF  THE  UNITED  STATES   179 

figures  would  appear  quite  satisfactory  were  it  not 
for  the  fact  that  the  price  level  has  been  steadily 
climbing  upward,  thus  lowering  wages  in  purchasing 
power.  While  it  is  impossible  with  existing  data  to 
construct  an  accurate  index  showing  the  prices  of 
goods  to  consumers,  it  is  possible  to  obtain  one,  the 
only  large  error  in  which  is  almost  sure  to  be  confined 
to  the  omission  of  statistics  of  house  rents.  Every 
one  knows  that  rents  have  risen  in  somewhat  the  same 
proportion  as  other  commodities,  so  the  error  from 
this  source  is  probably  not  very  great.  It  has  been 
necessary  to  use  wholesale  prices  for  part  of  the 
data,  but  this  will  not  obscure  the  general  tendencies. 

The  mode  of  computation  of  the  index  number  is 
illustrated  in  Table  XXXIII.  The  first  column  of 
this  table  indicates  that,  during  the  decade  1899  to 
1909,  the  general  price  index  rose  from  99.5  to  130.0, 
an  increase  of  over  30  per  cent.  In  other  words,  the 
price  level  went  up  faster  than  the  money  earnings  of 
labor  and,  hence,  the  real  annual  returns  for  labor 
showed  a  slight  decline  in  the  case  of  manufacturing 
and  a  decided  decrease  in  the  case  of  railway  employ- 
ees. And  these  are  two  of  the  great  fields  of  industry. 

The  evidence,  then,  indicates  that  all  the  entrench- 
ments of  organized  labor,  all  the  legislation  in  favor 
of  the  working  class,  all  of  our  new  inventions  have 
failed  to  prevent  the  invaders  from  forcing  down  the 
commodity  wages  of  American  labor. 


180 


WEALTH  AND  INCOME  OF 
TABLE  XXXIII 


INDICES  OF  AVERAGE  PRICES  OF  COMMODITIES  FOR  THE  UNITED 
STATES. 
Base  1890-1899. 

Weight 

15 

9 

1 

8 

l 

i 

Year. 

Weighted 
Average  of 
All  Com- 
modities. 

Retail 
Food 
Prices.i 

Fuel  and 
Light" 

Cloths 
and 
Clothing.3 

House 
Furnish- 
ing 
Goods.3 

Miscel- 
laneous.3 

1890 
1891 
1892 
1893 
1894 

105.6 
105.8 
103.7 
104.6 
98.3 

101.9 
103.4 
101.6 
104.1 
99.2 

105.3 
103.6 
102.2 
101.0 
93.5 

113.5 
111.3 
109.0 
107.2 
96.1 

111.1 
110.2 
106.5 
104.9 
100.1 

110.3 
109.4 
106.2 
105.9 
99.8 

1895 
1896 
1897 
1898 
1899 

96.0 
94.6 
94.7 
97.1 
99.5 

97.1 

95.2 
96.7 
99.7 
100.8 

97.8 
102.9 
95.8 
94.7 
103.1 

92.7 
91.3 
91.1 
93.4 
96.7 

96.5 
94.0 
89.8 
92.0 
95.1 

94.5 
91.4 
92.1 
92.4 
97.7 

1900 
1901 
1902 
1903 
1904 

105.3 
107.5 
112.6 
114.5 
115.0 

103.0 
108.5 
114.6 
114.7 
116.2 

116.0 
114.5 
127.2 
140.1 
125.5 

106.8 
101.0 
102.0 
106.6 
109.8 

106.1 
110.9 
112.2 
113.0 
111.7 

110.5 
108.5 
112.9 
113.6 
113.0 

1905 
1906 
1907 
1908 
1909 

115.3 
120.0 
125.8 
125.4 
130.0 

116.4 
120.3 
125.9 
130.1 
137.2 

121.8 
124.3 
126.7 
122.8 
119.7 

112.0 
120.0 
126.7 
116.9 
119.6 

109.1 
111.0 
118.5 
114.0 
111.7 

115.9 
122.5 
129.5 
122.8 
1265 

1910 
1911 
1912 

135.2 
133.3 
141.0 

144.1 
143.0 
154.2 

117.5 
114.6 
119.1 

123.7 
119.6 
120.7 

111.6 
111.1 
113.7 

131.6 
129.2 
133.6 

1  Bulletin  140,  United  States  Bureau  of  Labor  Statistics,  p.  11. 

2  Estimated  from  Bulletins  114  and  140  of  the  United  States 
Bureau  of  Labor  Statistics  and  from  the  report  of  The  General 
Electric  Co. 


THE  PEOPLE  OF  THE  UNITED  STATES       181 

Advocates  of  immigration  insist  that  the  decline 
in  the  average  commodity  wage  of  the  workers  of  the 
United  States  in  no  way  indicates  that  Americans 
are  becoming  less  prosperous.  On  the  contrary, 
they  picture  the  immigrant  flow  as  pushing  itself 
beneath  the  American  laborers  and  lifting  them  up 
to  higher  levels.  The  Americans  have  thus  come  to 
occupy  the  better  positions  and  to  receive  the  higher 
wages  while  the  immigrant  has  also  improved  his 
condition  over  what  it  was  in  Europe.  The  lowered 
average  wage  may,  therefore,  be  explained  as  being 
wholly  due  to  an  increasing  share  of  immigrants  in 
the  total  population. 

This  argument  is  so  specious  and  subtle  that  a 
careful  analysis  is  necessary  in  order  to  bring  to  light 
its  fallacies.  The  first  weakness  of  the  theory  lies 
in  the  fact  that  the  diminishing  average  wage  cannot 
legitimately  be  ascribed  to  an  increase  in  the  fraction 
of  the  population  born  in  foreign  lands,  for  the  per- 
centage of  foreigners  in  our  population  was  14.7  in 
1890  and  still  remained  at  the  same  figure  in  1910, 
with  but  a  slight  dip  in  the  interim.  But  the  immi- 
gration advocate  may  contend  that,  while  there  has 
been  no  increase  in  the  percentage  of  the  foreign- 
born,  nevertheless,  the  more  recent  arrivals  are  from 
the  low-wage  countries  of  Europe  and,  hence,  have 
tended  to  lower  the  average  wage,  even  though 

3  Bulletin  114,  United  States  Bureau  of  Labor  Statistics,  p.  12. 
Wholesale  Prices. 


182  WEALTH  AND  INCOME  OF 

adding  to  the  general  prosperity  of  the  American-born 
workers. 

This  argument,  however,  is  a  two-edged  sword. 
If  these  recent-comers  are  from  such  a  decidedly  low- 
wage  class,  they  evidently  have  low  standards  of 
living.  We  have  seen  that  the  large  majority  of 
the  American  working  classes  do  not  possess  sufficient 
property  to  aid  materially  in  increasing  their  income — 
to  constitute  any  adequate  recompense  for  a  cut  in 
their  wages.  In  democratic  America,  with  its  free 
schools  and  broad  opportunities,  we  cannot  perma- 
nently maintain  a  society  composed  of  castes  and, 
in  the  next  generation,  if  not  in  the  present  one, 
the  descendants  of  the  Puritans  or  Cavaliers  will  find 
themselves  strenuously  competing  in  the  wage- 
market  with  those  who  trace  their  ancestry  to  Russia, 
Italy,  or  the  Balkans.  And,  in  this  contest,  the 
lowest  and  not  the  highest  standard  is  almost  sure 
to  win. 

It  will  be  contended  by  some  that  the  decline  in 
commodity  wages  is  due  wholly  to  the  fact  that 
money  wages  have  lagged  behind  commodity  prices 
during  the  steady  rise  of  the  latter  caused  by  our 
increasing  money  supply.  This  contention  is  worthy 
of  careful  consideration  and  the  failure  of  wages  in 
purchasing  power  to  continue  their  upward  trend 
may,  partially,  be  accounted  for  in  this  way.  We 
shall  see  later,  however,  that  the  tendency  has  con- 


THE  PEOPLE  OF  THE  UNITED  STATES   183 

tinued  for  at  least  sixteen  years,  a  period  which  would 
seem  long  enough  for  wages  to  have  almost  completely 
adjusted  themselves  to  the  rising  price  level.  But, 
after  all,  the  strongest  reason  for  ascribing  the  ces- 
sation of  the  ascent  of  the  purchasing  power  wage  to 
immigration,  lies  in  the  fact  that  it  would  be  almost 
inconceivable  that  laborers  could  indefinitely  pour 
into  the  country  without  lowering  wages,  especially 
after  the  free  land  has  practically  disappeared. 
It  is  a  well  known  fact  that  the  price  of  labor  in 
eastern  and  southern  Europe  is  less  than  half  what  is 
charged  for  it  in  the  United  States.  The  free  im- 
portation of  any  commodity  from  countries  where  it 
is  very  cheap  always  tends  to  lower  the  price  in  the 
importing  country  to  that  of  the  region  from  which  it 
comes,  plus  freight  charges.  In  this  respect,  labor 
is  just  like  wheat  or  lumber.  The  shipment  is  not 
quite  so  easy,  but,  if  there  are  no  restrictions  on  its 
importation,  there  seems  to  be  no  possible  way  of 
avoiding  the  conclusion  that  the  price  must  eventually 
be  forced  down  to  the  level  of  the  country  from  which 
the  labor  is  sent  out.  And  we  do  not  even  have  the 
satisfaction  of  seeing  the  commodity  value  of  labor 
in  Europe  greatly  raised  because  of  exports  of  workers 
to  this  country,  for  the  production  of  labor  is  so 
rapid  among  the  lower  classes  in  those  countries 
which  furnish  most  of  our  immigrants  that  the  supply 
is  kept  ever  undiminished  and  the  price  always  at  a 
low  level. 


184  WEALTH  AND  INCOME  OF 

But,  if  the  contention  is  granted  that  the  failure  of 
wages,  measured  in  purchasing  power,  to  continue 
their  rise  during  the  last  decade  is  caused  by  the 
increase  in  the  labor  supply  offered  on  the  markets 
of  the  United  States,  why  did  the  upward  climb  in 
commodity  wages  not  cease  until  about  1897?  Immi- 
gration has  been  pouring  across  the  sea  for  three 
centuries.  Is  there  any  reason  that  its  effects  now 
should  differ  from  those  of  one  or  two  generations 
ago?  There  is  this  striking  difference.  For  a  century 
preceding  1885,  the  great  westward  movement  of  the 
American  people  was  rolling  across  the  fertile  Missis- 
sippi Valley.  Farms  of  good  quality  could  be  had 
for  the  asking  and  wages  could  not  be  forced  below 
the  amount  which  a  man  could  earn  by  farming 
this  rich,  moist,  free  land.  About  1885,  this  great 
wave  reached  the  arid  plains  of  the  Western  High- 
lands. It  recoiled  upon  itself  and  some  ten  years 
was  occupied  in  filling  up  the  interstices  left  unoccu- 
pied by  the  hasty  onrush  of  humanity.  By  1897,  the 
systematic  forcing  down  of  the  margin  had  genuinely 
begun,  for  there  were  no  more  good  free  lands  and 
more  intensive  cultivation  became  necessary  in  order 
to  supply  the  nation  with  food  stuffs.  Up  till  this 
time,  the  flood  of  foreigners  had  poured  in  and  been 
swallowed  up  without  serious  retardation  of  our 
progress.  With  this  changed  condition  of  affairs, 
American  labor  was  no  longer  able  to  avoid  the  attack 


THE  PEOPLE  OF  THE  UNITED  STATES   185 

upon  it  and  the  enormous  advantages  due  to  the 
great  new  discoveries  and  inventions  of  the  last  two 
decades  have  nearly  all  been  sacrificed  in  the  vain 
endeavor  to  outstrip  the  growth  of  population.  The 
immigrants  have  taken  possession  of  the  unskilled 
fields  of  industry,  overwhelming  the  workers  in  that 
line,  not  only  through  actual  arrivals  from  abroad, 
but  through  the  high  birth  rate  which  furnishes  a 
constant  over-supply  in  the  lower  ranks  of  the  laboring 
class.  Our  cities  have  been  forced  into  a  mushroom 
growth  resulting  in  the  crowding  of  the  inhabitants 
into  narrow  and  dingy  quarters.  All  plans  for  city 
improvement  have  been  nullified  by  the  mad  rush 
necessary  merely  to  keep  pace  with  the  growing 
numbers.  Appalled  by  the  continuing  poverty  and 
the  restless  demands  of  the  lower  strata  of  wage 
earners,  appeals  have  been  made  to  the  public  to 
raise  artificially  the  price  of  labor  by  establishing 
a  legal  minimum  wage,  all  regardless  of  the  fact  that, 
were  it  effectively  put  into  operation,  it  would  serve 
merely  as  an  added  bait  to  draw  on  the  waiting 
European  multitudes. 

And  this  is  merely  the  economic  phase  of  the  immi- 
gration problem.  The  political  and  social  evils 
wrought  by  the  invading  hosts  are  perhaps  just  as 
destructive  to  American  welfare.  Poverty,  corrup- 
tion, and  crime  are  the  constant  camp-followers  of 
the  foreign  army.1 

1  See  The  Old  World  in  the  New,  by  Professor  Edward  A.  Ross. 


186  WEALTH  AND  INCOME  OF 

Had  immigration  been  ruthlessly  shut  out  a  gener- 
ation since,  there  is  no  reason  to  believe  that  the  wages 
of  our  American  working  class  would  not  today  be 
climbing  steadily  upward  along  the  path  marked  out 
for  them  by  the  course  of  the  last  century.  And  the 
welfare  of  the  workingman  means  the  welfare  of  the 
nation,  for  most  of  the  nation's  population  are  em- 
ployees and  half  the  nation's  income  consists  of  wages 
and  salaries. 

And  why  has  immigration  been  thus  allowed  to 
flow  in  without  restriction  when  its  injurious  effects 
are  so  apparent?  The  reasons  are  two:  First,  the 
more  influential  class  of  Americans  has  not  felt  any 
evil  effects.  Cheap  labor  has  made  large  profits  for 
many  great  corporations,  and  the  shareholders  do 
not  object  to  this.  Large  population  has  brought 
high  rents,  and  landlords  are  well  pleased.  Immi- 
gration has  brought  travel,  and  the  railway  and 
steamship  companies  register  no  protests.  From  the 
standpoint,  then,  of  the  landlord,  the  capitalist,  and 
the  entrepreneur,  no  damage  has  been  done.  Only 
the  large  majority  have  suffered — the  minority  have 
gained  or  at  least  come  through  unscathed.  As  was 
noted  in  the  last  chapter,  the  average  real  income  of 
the  American  people  has  climbed  steadily  upward, 
the  census  of  1910  showing  no  halt  in  the  progress. 
If,  then,  wages  have  failed  to  participate  in  the 
increase,  the  other  shares  must  have  benefitted  all 


THE  PEOPLE  OF  THE  UNITED  STATES   187 

the  more.  As  was  before  mentioned,  those  members 
of  the  laboring  class  who  own  considerable  property 
have  perhaps  gained  more  through  better  incomes 
from  that  source  than  they  have  lost  through  de- 
clining real  wages.  It  is  the  practically  propertylesa 
majority  who  have  felt  the  adverse  effects  of  being 
compelled  to  compete  with  foreign  labor. 

Second :  The  sentimental  argument  has  been  steadily 
drummed  into  the  ears  of  the  American  people  by 
those  interested  in  retaining  a  cheap  labor  supply. 

We  have  had  pictured  to  us  the  dire  conditions  of 
the  poor  Europeans  and  we  are  urged  not  to  turn  a 
deaf  ear  to  their  pleas,  not  to  deny  them  entrance  to 
"the  land  of  the  free."  There  seems  no  reason  for 
granting  the  contention  that  it  is  the  duty  of  Ameri- 
cans to  remedy  the  poverty  brought  about  by  the 
ignorance  and  carelessness  of  the  people  of  other 
nations.  But,  even  were  it  our  duty  to  protect  the 
world's  downtrodden,  it  by  no  means  follows  that  we 
help  Europe  by  allowing  its  surplus  population  to 
come  freely  to  our  shores.  The  immigrants  are, 
apparently,  the  more  energetic  fraction  of  the  lower 
classes  of  Europe.  Their  exit,  therefore,  lowers  rather 
than  raises  the  average  quality  of  the  people  in  the 
countries  from  which  they  come.  Moreover,  the 
lower  classes  in  the  nations  that  furnish  the  bulk  of 
our  immigration  still  have  their  numbers  regulated 
mainly  by  positive  checks — famine,  war,  disease,  and 


188  WEALTH  AND  INCOME  OF 

starvation.  The  emigration  of  part  of  the  population 
merely  results  in  a  higher  birth  rate  and  lower  death 
rate  among  those  remaining  behind  and  the  same 
overcrowding  and  squalor  continue  as  before.  The 
only  recent  instance  in  which  the  pressure  of  popu- 
lation has  been  apparently  lessened  at  all  by  immi- 
gration is  that  of  Ireland.  There,  the  inhabitants 
migrated  almost  en  masse  to  the  United  States.  But 
a  study  of  the  population  statistics  of  Austria,  Russia, 
Italy,  and  the  Balkan  nations  gives  us  no  reason  to 
believe  that  the  emigration  from  those  countries  to 
the  United  States  has  materially  lessened  the  popu- 
lation pressure  or  bettered  conditions  for  their 
working  people,  even  temporarily.  Therefore,  the 
American  people  suffer  and  Europe  does  not  gain. 

But  the  reader  will  doubtless  assert  that  the  author 
has  been  much  too  hasty  in  drawing  these  sweeping 
conclusions  concerning  the  economical  effects  of 
immigration  merely  from  the  evidence  of  one  ad- 
mittedly doubtful  estimate  and  of  two  items  from 
government  reports.  In  order  to  allay  suspicions  of 
this  sort,  it  has  been  felt  necessary  to  make  a  careful 
and  rather  comprehensive  study  of  the  trend  of  the 
purchasing  power  of  wages  in  the  United  States. 

According  to  generally  accepted  economic  theory, 
the  price  of  labor  is  determined  by  the  value  of  its 
product.  When  labor  has  much  capital  and  natural 
resources  with  which  to  work,  the  price  of  labor  is 


THE  PEOPLE  OF  THE  UNITED  STATES       189 


high,  and  vice  versa.  We  have  seen  that  the  capital 
supply  has  more  than  kept  pace  with  the  number  of 
workers  but  that  the  land  supply  per  man  has  de- 

TABLE  XXXIV 


INDICES  OF  COMMODITY  PRICES  AND  OF  HOURLY  WAGES  FOR 

MEN  IN  ALL  INDUSTRIES. 

Base  1890-1899. 

Year. 

Index 
of 

Money 
Wages,  i 

Index  of 
Com- 
modity 
Prices. 

Index  of 
Wages 
in  Pur- 
chasing 
Power. 

Year. 

Index 
of 
Money 
Wages. 

Index  of 
Com- 
modity 
Prices. 

Index  of 
Wages 
in  Pur- 
chasing 
Power. 

1850 

47.1 

100.6 

46.8 

1870 

94.8 

162.8 

58.2 

1851 

47.6 

111.2 

42.8 

1871 

94.4 

153.4 

61.5 

1852 

48.8 

110.4 

44.2 

1872 

94.8 

149.3 

63.5 

1853 

49.1 

118.4 

41.5 

1873 

94.2 

145.4 

64.8 

1854 

51.4 

118.4 

43.4 

1874 

92.2 

146.5 

62.9 

1855 

52.3 

123.1 

42.5 

1875 

91.4 

145.3 

62.9 

1856 

53.1 

126.6 

41.9 

1876 

87.6 

138.2 

63.4 

1857 

54.2 

128.5 

42.2 

1877 

83.2 

128.1 

64.9 

1858 

53.0 

127.6 

41.6 

1878 

81.5 

117.9 

69.1 

1859 

53.5 

116.0 

46.1 

1879 

80.6 

107.1 

75.3 

1860 

54.2 

112.7 

48.1 

1880 

82.7 

118.3 

69.9 

1861 

54.6 

106.1 

51.5 

1881 

87.2 

122.2 

71.3 

1862 

57.2 

117.4 

48.8 

1882 

88.4 

123.0 

71.9 

1863 

65.5 

149.0 

44.0 

1883 

92.1 

120.2 

76.6 

1864 

73.9 

194.0 

38.1 

1884 

89.7 

115.7 

77.6 

1865 

82.7 

261.8 

31.6 

1885 

90.2 

105.2 

85.7 

1866 

85.8 

211.6 

40.6 

1886 

91.0 

105.3 

86.4 

1867 

90.5 

186.9 

48.4 

1887 

93.3 

106.6 

87.5 

1868 

92.7 

196.1 

47.3 

1888 

94.1 

108.5 

86.7 

1869 

94.1 

171.7 

54.8 

1889 

97.0 

111.1 

87.3 

1890 

100.2 

105.6 

94.9 

Computed  from   Tables  42   and  44,  Senate  Report  1394, 
Part  I,  1893,  pp.  176-8. 


190 


WEALTH  AND  INCOME  OF 


TABLE  XXXV 


RELATIVE  PRICES  OF  COMMODITIES  AND  MEN'S  LABOR  PER 

HOUR  IN   ALL   INDUSTRIES.1 

Base  1890-1899. 

Index  of 

Index  of 

Com- 

Com- 

Com- 

Com- 

Year. 

Labor 
Index. 

modity 
Index. 

modity 
Value  of 

Year. 

Labor 
Index. 

modity 
Index. 

modity 
Value  of 

Labor. 

Labor. 

1890 

100.2 

105.6 

94.8 

1905 

125.5 

115.3 

108.8 

1891 

100.5 

105.8 

95.0 

1906 

132.0 

120.0 

110.0 

1892 

101.8 

103.7 

98.1 

1907 

137.1 

125.8 

109.0 

1893 

101.6 

104.6 

97.1 

1908 

133.5 

125.4 

106.4 

1894 

96.7 

98.3 

98.4 

1909 

132.9 

130.0 

102.2 

1895 

98.2 

96.0 

102.3 

1910 

137.6 

135.2 

101.8 

1896 

99.0 

94.6 

104.7 

1911 

141.0 

133.3 

105.8 

1897 

99.3 

94.7 

104.8 

1912 

145.2 

141.0 

103.0 

1898 

99.6 

97.1 

102.6 

AT.  price 

1899 

103.0 

99.5 

103.5 

of  labor 
per  hour, 

1890-99 

$0.1510 

1900 

107.0 

105.3 

101.6 

1901 

110.2 

107.5 

102.5 

1902 

114.4 

112.6 

101.6 

AT.  price 

1903 

119.8 

114.5 

104.6 

of  labor 
per  hour, 

1904 

122.6 

115.0 

106.6 

1912 

$0.2192 

creased.  We  shall  examine  into  the  net  effects  which 
this  change  has  produced  on  labor.  In  considering 
the  price  of  labor  as  a  commodity,  each  occupation 
and  industry  has  been  given  a  constant  weight  in 
order  that  the  results  might  not  be  vitiated  by  a  vary- 
ing composition  of  the  wage  earning  body  at  different 
dates.  The  weights  are  roughly  proportional  to  the 
number  of  workers  at  some  date  chosen.  The  results 
1  Taken  from  Tables  XXXIII  and  XXXVII. 


THE  PEOPLE  OF  THE  UNITED  STATES       191 

are  all  computed  from  the  reports  of  governmental 
investigations,  have  been  carefully  checked,  and  are 
believed  to  be  reasonably  accurate  for  the  entire 
ground  covered,  except  in  the  case  of  agricultural 
labor.  This  is  subject  to  a  considerable  degree  of 
error  but  is  based  on  the  only  government  reports 
available,  those  published  by  the  Department  of 
Agriculture. 

The  figures  for  wages  preceding  1890  are  all  based 
on  the  Aldrich  Report  prepared  by  Roland  P.  Falkner. 
The  weights  there  used  were  varied  according  to  the 
reported  number  of  workers  in  each  industry  from 
year  to  year.  This  gives  an  index  of  average  earnings 
per  hour  rather  than  an  index  of  the  price  of  labor. 
The  distinction  is  important,  but  it  is  unlikely  that 
the  difference  in  the  weighting  systems  would  notice- 
ably change  the  indices  obtained.  It  is  almost  certain 
that  the  trend  of  wages  shown  would  not  be  materi- 
ally affected. 

The  fact  should  be  noted  that,  while  we  have  here- 
tofore been  dealing  with  the  earnings  of  all  employees, 
the  following  tables  take  into  consideration  wage 
earners  only,  entirely  omitting  all  salaried1  workers. 
The  first  tables  show  changes  in  the  hourly  rates. 

1  Persons  employed  by  the  day  or  week  are  usually  said  to 
receive  wages  while  those  hired  by  the  year  are  known  commonly 
as  salaried  employees.  The  latter  class  includes  most  of  the 
skilled  clerical  force,  the  technical  experts,  and  managers  of  all 
sorts. 


192 


WEALTH  AND  INCOME  OF 


It  was  impossible  to  get  accurate  statistics  con- 
cerning the  wages  of  women  before  1890,  hence  the 
figures  for  the  years  1850  to  1890  are  wholly  for  male 

workers. 

FIGURE  21 

RELATIVE  PRICES  OF  MEN'S  LABOR  AND  COMMODITIES, 
Base  1890-1899.    Continental  United  States. 


280 

74fl 

220 

200 

inn 

g 

1 

160 

S 

i 

S 

-      140 

%. 

\  , 

/• 

„ 
H 

120 

4 

^\ 

I 

.X 

'PI 

^/ 

100 

\J 

\ 

j 

\i 

\ 

^> 

7i=\., 

x^^i 

^ 

^s 

<^» 

\ 

*'£-• 
/ 

rf*°>i< 

,  ,''- 

3 

^s- 
ri** 

=^ 

r^ej 

60 

^7 

x1^ 

^S  *< 

? 

9 

40 

*-N.~ 

H/ 

'V 

/c° 

X 

\ 

/ 

0 

Year 


Fig.  21  illustrates  the  general  course  of  the  price  of 
labor  for  sixty-two  years.  It  is  only  necessary  to 
call  attention  to  a  few  salient  features.  It  is  notice- 


THE  PEOPLE  OF  THE  UNITED  STATES   193 

able  that  the  price  of  labor  is  much  more  stable  than 
the  price  of  other  commodities.  The  tremendous  rise 
of  the  latter  in  1865,  due  to  the  greenback  inflation, 
was  accompanied  by  a  smaller  increase  in  money 
wages  resulting  in  a  marked  drop  in  the  purchasing 
power  of  an  hour's  work.  In  almost  every  instance, 
wages  have  failed  to  respond  fully  to  short  time  price 
fluctuations  and,  as  a  result,  there  is  close  inverse 
correlation  between  the  short  time  changes  in  the 
commodity  price  level  and  average  real  wages. 

From  1865  to  1896,  the  general  trend  of  real  wages 
was  very  steadily  toward  higher  levels,  except  for 
temporary  backsets.  After  1896,  the  progress  up- 
ward ceased  and,  since  1906,  there  are  some  suspicious 
indications  of  a  general  decline.  The  important 
feature  is  that  the  ascent  has  been  checked,  and  that, 
right  in  the  face  of  the  greatest  industrial  develop- 
ment that  the  world  has  ever  seen.  A  little  further 
vision  on  the  part  of  our  statesmen  at  Washington 
seems,  at  present,  even  more  essential  to  the  welfare 
of  the  working  classes  than  does  the  inventive  genius 
of  the  scientist  in  his  laboratory,  the  monopolizing 
power  of  the  labor  union,  or  the  organizing  ability 
of  the  great  captain  of  industry. 

It  is  interesting  to  know  whether  wages  have  fol- 
lowed about  the  same  course  in  different  industries 
or  whether  there  has  been  a  gain  in  some  and  a  loss 
in  others;  whether  women's  wages  have  kept  pace  with 
14 


194 


WEALTH  AND  INCOME  OF 


those  of  men  or  whether  they  have  risen  faster  or 
more  slowly.  These  points  are  brought  out  by 
Tables  XXXVI  and  XXXVII  and  by  Fig.  22.  It 
is  clearly  seen  that,  in  manufacturing,  the  wages  of 
men  and  women  fluctuate  together,  the  differences 
being  very  slight.  The  relatively  wide  changes  in 
the  hourly  wages  of  miners  at  different  periods  in  the 

TABLE  XXXVI. 


RELATIVE  PRICES   OP  COMMODITIES  AND  WOMEN'S  LABOK 

PER  HOUR  IN  MANUFACTURING.1 

Base  1890-1899. 

Index 

Index  of 

of 

Year. 

Labor 
Index. 

Com- 
modity 
Index. 

Com- 
modity 
Value  of 

Year. 

Labor 
Index. 

Com- 
modity 
Index. 

Com- 
modity 
Value 

Labor. 

of 

Labor. 

1890 

100.0 

105.6 

94.7 

1905 

117.6 

115.3 

102.0 

1891 

99.5 

105.8 

94.0 

1906 

125.4 

120.0 

104.5 

1892 

99.6 

103.7 

96.0 

1907 

136.7 

125.8 

108.6 

1893 

102.1 

104.6 

97.6 

1908 

135.2 

125.4 

107.8 

1894 

98.9 

98.3 

100.5 

1909 

133.5 

130.0 

102.6 

1895 

99.7 

96.0 

103.8 

1910 

137.5 

135.2 

101.7 

1896 

103.0 

94.6 

108.9 

1911 

137.7 

133.3 

103.3 

1897 

100.2 

94.7 

105.8 

1912 

147.8 

141.0 

104.8 

1898 

98.9 

97.1 

101.8 

AT. 

1899 

97.4 

99.5 

97.9 

money 
wage  per 

1900 

104.3 

105.3 

99.0 

hour, 
1890-99 

$0.1061 

1901 

106.3 

107.5 

98.9 

Av. 

1902 

111.3 

112.6 

98.8 

money 

1903 

115.0 

114.5 

100.4 

wage  per 
hour 

1904 

114.3 

115.0 

99.4 

1912 

$0.1541 

1  Taken  from  Tables  XXXIII  and  XXXVIa. 


THE  PEOPLE  OF  THE  UNITED  STATES       195 
TABLE  XXXVII 


INDICES6  OF  THE  PRICE  OF  LABOR  PER  HOUR  FOR  MALE  WAGE 

EARNERS  IN  VARIOUS  INDUSTRIES. 

Weight.* 

17 

2 

8 

l 

6 

Year. 

All 

Industries. 

Rail- 
roading 1 

Manu- 
facturing.2 

Mining.6 

Agricul- 
ture.3 

1890 

100.2 

96.3 

102.1 

97.0 

99.4 

1891 

100.5 

96.4 

101.7 

96.9 

100.9 

1892 

101.8 

99.5 

101.5 

109.5 

101.8 

1893 

101.6 

100.6 

102.0 

100.5 

101.6 

1894 

96.7 

99.4 

97.2 

95.5 

95.4 

1895 

98.2 

100.1 

97.7 

105.2 

97.1 

1896 

99.0 

100.6 

98.7 

99.8 

98.7 

1897 

99.3 

100.9 

98.2 

103.2 

99.5 

1898 

99.6 

102.5 

98.9 

96.6 

100.2 

1899 

103.0 

103.7 

101.9 

95.8 

105.5 

1900 

107.0 

105.8 

105.6 

99.9 

110.5 

1901 

110.2 

106.9 

108.3 

107.4 

114.4 

1902 

114.4 

108.5 

113.1 

114.7 

118.1 

1903 

119.8 

114.6 

117.6 

119.6 

124.6 

1904 

122.6 

118.2 

116.6 

135.3 

130.1 

1905 

125.5 

119.4 

119.3 

127.4 

135.5 

1906 

132.0 

121.3 

125.6 

150.4 

141.0 

1907 

137.1 

129.5 

131.3 

142.2 

146.5 

1908 

133.5 

132.6 

127.8 

127.3 

142.3 

1909 

132.9 

132.5 

128.8 

133.6 

138.5 

1910 

137.6 

137.5 

135.1 

142.4 

140.2 

1911 

141.0 

143.4 

136.5 

141.6 

146.2 

1912 

145.2 

145.6 

140.3 

149.8 

150.9 

Av.  money 

price  per 

hour,  1890-9 

$0.1510 

$0.1831 

$0.1959 

$0.2018 

$0.0748 

Av.  1912 

.2192 

.2664 

.2749 

.3023 

.1169 

Estimated  from  the  reports  of  the  Interstate  Commerce 
Commission. 


196 


WEALTH  AND  INCOME  OF 


business  cycle  contrast  markedly  with  the  much 
greater  steadiness  of  the  price  of  labor  in  manufactur- 
ing industries.  It  will  also  be  noted  that  the  gains 

FIGURE  22 
RELATIVE  CHANGES  IN  THE  PRICES  OF  COMMODITIES  AND  LABOR 

PER  HOUR  IN  DIFFERENT  INDUSTRIES, 
Base  1890-1899.    Continental  United  States. 


Year 

2  Computed  from  the  Bulletins  of  the  United  States  Bureau  of 
Labor.    Weighted  approximately  according  to  the  number  of 
employees  in  1900. 

3  Estimated  from  the  Bulletin  of  the  United  States  Depart- 
ment of  Agriculture  by  George  K.  Holmes  on  The  Wages  of  Farm 
Labor  and  from  Farmers'  Bulletin  584  of  the  same  Department. 
Based  on  wages  of  men  hired  by  the  year  without  board. 

4  Weighted  approximately  in  proportion  to  the  number  em- 
ployed in  1900. 

•  Base  1890-1899. 

6  Assumed  that  hours  of  labor  varied  from  9.36  in  1890  to 
8.78  in  1912.  Average  hours  of  labor  in  1909  given  in  the 
United  States  Census  for  Mines  and  Quarries  for  1909  as  8.84. 
See  p.  31. 


PEOPLE  OF  THE  UNITED  STATES   197 


in  the  wages  of  agricultural  labor  have  been  slightly 
greater  than  in  any  other  of  the  great  fields  of  pro- 
duction. 

FIGURE  23 

AVERAGE  PRICES  OF  LABOR  PER  HOUR  IN  VARIOUS 

INDUSTRIES  COMPARED  FOR  1894-1911, 

Continental  United  States. 


1311 


Year 


The  absolute  money  wages  per  hour  paid  in  different 
lines  of  industry  are  better  compared  by  Fig.  23.  The 
reader  will  observe  that  the  disagreeable  occupation 
of  mining  commands  a  little  higher  hourly  wage  than 
any  of  the  others.  The  agricultural  laborer  receives 
a  very  low  money  wage  for  his  services.  This  is 
accounted  for,  presumably,  by  the  larger  number  of 
perquisites  not  accounted  for  in  the  records,  by  the 
lower  price  of  commodities  in  the  rural  regions,  by 


198 


WEALTH  AND  INCOME  OF 


TABLE  XXXVIII 


INDICES  OF  COMMODITY  PKICES  AND  OP  DAILY  WAGES  FOE 

MEN  IN  ALL  INDUSTRIES. 

Base  1890-1899. 

Year. 

Index 
of 
Money 
Wages.1 

Index 
of  Com- 
modity 
Prices.  2 

Index  of 
Wages  in 
Purchas- 
ing 
Power. 

Year. 

Index 
of 
Money 
Wages. 

Index 
of  Com- 
modity 
Prices. 

Index  of 
Wages  in 
Purchas- 
ing 
Power. 

1850 

54.8 

100.6 

54.5 

1870 

100.7 

162.8 

61.9 

1851 

54.9 

111.2 

49.4 

1871 

100.3 

153.4 

65.4 

1852 

55.4 

110.4 

50.2 

1872 

100.7 

149.3 

67.5 

1853 

56.2 

118.4 

47.5 

1873 

100.1 

145.4 

68.9 

1854 

57.8 

118.4 

48.8 

1874 

98.0 

146.5 

66.9 

1855 

58.8 

123.1 

47.8 

1875 

95.3 

145.3 

65.5 

1856 

59.1 

126.6 

46.7 

1876 

91.3 

138.2 

66.0 

1857 

59.8 

128.5 

46.6 

1877 

86.7 

128.1 

67.7 

1858 

59.0 

127.6 

46.3 

1878 

85.0 

117.9 

72-0 

1859 

60.1 

116.0 

51.8 

1879 

84.0 

107.1 

78.5 

1860 

60.3 

112.7 

53.5 

1880 

86.2 

118.3 

72.9 

1861 

60.7 

106.1 

57.2 

1881 

90.9 

122.2 

74.3 

1862 

62.5 

117.4 

53.3 

1882 

92.2 

123.0 

74.9 

1863 

71.6 

149.0 

48.1 

1883 

96.0 

120.2 

79.9 

1864 

80.8 

194.0 

41.7 

1884 

935 

115.7 

80.8 

1865 

89.6 

261.8 

34.2 

1885 

94.0 

105.2 

89.3 

1866 

93.8 

211.6- 

44.3 

1886 

93.9 

105.3 

89-2 

1867 

98.9 

186.9 

52.9 

1887 

94.4 

106.6 

88.6 

1868 

99.4 

196.1 

50.7 

1888 

95.2 

1085 

87.8 

1869 

100.9 

171.7 

58.8 

1889 

98.2 

111.1 

88.4 

1890 

101.2 

105.6 

95.8 

1  Adjusted  to  base  1890-9  from  Table  42,  p.  176,  Senate  Report 
1894,  Part  I,  1893. 

2  Adjusted  to  base  1890-9  from  Table  24,  p.  93,  Senate  Report 
1394,  Part  I,  1893. 


THE  PEOPLE  OF  THE  UNITED  STATES   199 


the  small  degree  of  skill  required,  and  by  the  fact 
that  the  negro  population  forms  some  thirty  per 
cent  of  the  entire  number  of  agricultural  laborers. 
Women  in  manufacturing  receive  a  higher  wage  than 
that  paid  to  men  in  agriculture  and,  yet,  the  women 
get  but  little  more  than  half  the  pay  given  to  men. 

TABLE  XXXIX 


RELATIVE  PRICES  OF  COMMODITIES  AND  MEN'S  LABOR  PER 

WEEK  IN  ALL  INDUSTRIES.* 

Base  1890-1899. 

Year. 

Index 
of  Price 
of 
Labor. 

Index 
of  Com- 
modity 
Prices. 

Index  of 
Com- 
modity 
Value  of 
Labor. 

Year. 

Index  of 
Price  of 
Labor. 

Index 
of  Com- 
modity 
Prices. 

Indet  of 
Corn- 
mod,  ty 
Value  of 
Labor. 

1890 

101.2 

105.6 

95.8 

1905 

120.3 

115.3 

104.3 

1891 

101.9 

105.8 

96.3 

1906 

126.1 

120.0 

105.1 

1892 

103.3 

1C3.7 

99.6 

1907 

130.7 

125.8 

103.9 

1893 

102.2 

104.6 

97.7 

1908 

126.5 

125.4 

100.9 

1894 

96.9 

98.3 

98.6 

1909 

125.8 

130.0 

96.8 

1895 

97.8 

96.0 

101.8 

1910 

130.2 

135.2 

96.3 

1896 

98.2 

94.6 

103.8 

1911 

132.3 

133.3 

99.3 

1897 

98.2 

94.7 

103.7 

1912 

135.7 

141.0 

96.3 

1898 

98.6 

97.1 

101.6 

Av.  price 

1899 

101.3 

99.5 

101.8 

oflabor 
per  week. 

189O-99 

$8.23 

1900 

104.3 

105.3 

99.0 

1901 

107.2 

107.5 

99.7 

1902 

110.9 

112.6 

98.5 

Av.  price 

1903 

115.5 

114.5 

100.9 

of  labor 
per  week. 

1904 

117.7 

115.0 

102.3 

1912 

$11.17 

The  preceding  discussion  has  dealt  with  the  price 
of  labor  per  hour.  But  hours  of  labor  change  from 
year  to  year  and,  hence,  changes  in  the  price  per  day 

1  Taken  from  Tables  XXXIII  and  XLI. 


200 


WEALTH  AND  INCOME  OF 


or  week  differ  to  some  degree  from  the  changes  in  the 
price  per  hour.  The  laborer's  family  is  less  concerned 
over  the  hourly  rate  than  over  the  weekly  rate,  for 
it  is  the  latter  which  largely  determines  the  amount  of 
commodities  which  may  be  purchased. 

FIGURE  24 

RELATIVE  COMMODITY  PRICES  AND  EARNINGS  OF  MEN, 
Base  1890-1899.    Continental  United  States. 


260 


240 


220 


200 


180 


160 


140 


120 


100 


•20 


oney  Wag 
per 


k£ 


Commod 


^ty  Wages 


Day 


Moi 


^ 


4rWe 


ey  Wiages 


ek 


odlty 


irWe 


Wag 


Year. 


In  general,  there  is  no  striking  difference  between 
the   curves  in   Fig.   24   representing  the   course   of 


THE  PEOPLE  OF  TEE  UNITED  STATES   201 

weekly  or  daily  wages  and  the  corresponding  curves 
for  hourly  wages  shown  in  Fig.  21.  The  main  differ- 
ence lies  in  the  fact  that  the  hours  of  labor  have  been 
steadily  shortened  with  the  result  that  daily  or  weekly 
wages  rose  more  slowly  before  1896  than  did  hourly 
wages  and,  since  that  date,  have  declined  to  a  notice- 
ably greater  extent  than  the  latter.  The  wages  of 
men  and  women,  while  not  fluctuating  together  at 
all  times,  have,  in  general,  shown  like  tendencies. 

During  the  last  fifteen  years,  the  rising  money 
wages  have  served  to  hide  from  the  workingman  the 
fact  that  the  shortening  of  his  hours  of  labor  was 
resulting  in  a  decrease  in  the  power  of  his  daily 
earnings  to  buy  the  commodities  desired. 

Table  XL  indicates  a  decline  of  over  10  per  cent 
in  the  weekly  wages  in  purchasing  power  of  women 
since  1896  as  against  a  fall  of  8  per  cent  in  the  com- 
modity wages  of  men  since  the  same  date.  These 
indices  are  all  computed  on  the  basis  of  full  time 
weekly  earnings  and  show  nothing  concerning  loss  of 
time  or  overtime.  While  the  extent  of  employment 
fluctuates  steadily  with  the  business  cycle,  there  is 
no  evidence  to  show  that,  in  the  long  run,  it  is  be- 
coming of  either  greater  or  less  importance  than 
formerly. 

Table  XLI  compares  weekly  wages  by  industries. 
The  absolute  payments  in  the  various  industries 
in  1894  and  1911  are  illustrated  in  Fig.  25.  It  will  be 


202 


WEALTH  AND  INCOME  OF 


observed  that  the  changes  occurring  are,  relatively, 
considerably  less  than  those  taking  place  in  hourly 
wages  during  the  same  seventeen  year  interval. 

Much  stress  has  been  laid  in  the  preceding  pages 
upon  the  fact  that  the  purchasing  power  of  wages  has 

TABLE  XL 


RELATIVE  PRICES  OF  COMMODITIES  AND  WoMEN's1  LABOR  PER 

WEEK  IN  MANUFACTURING. 

Base  1890-1899. 

Index  of 

Index  of 

Com- 

Com- 

Com- 

Com- 

Year. 

Labor 
Index.2 

modity 
Index. 

modity 
Value  of 

Year. 

Labor 
Index. 

modity 
Index. 

modity 
Value  of 

Labor. 

Labor. 

1890 

101.0 

105.6 

95.6 

1905 

115.7 

115.3 

100.3 

1891 

100.9 

105.8 

95.4 

1906 

122.9 

120.0 

102.4 

1892 

101.0 

103.7 

97.4 

1907 

133.0 

125.8 

105.7 

1893 

102.1 

104.6 

97.6 

1908 

130.6 

125.4 

104.1 

1894 

96.4 

98.3 

98.1 

1909 

129.0 

130.0 

99.2 

1895 

99.6 

96.0 

103.7 

1910 

130.7 

135.2 

96.7 

1896 

102.7 

94.6 

108.6 

1911 

130.9 

133.3 

98.2 

1897 

99.7 

94.7 

105.2 

1912 

138.3 

141.0 

98.1 

1898 

99.1 

97.1 

102.1 

Av. 

1899 

97.5 

99.5 

98.0 

money 
wage  per 

1900 

103.9 

105.3 

98.7 

week, 
1890-99 

S5.333 

1901 

105.8 

107.5 

98.4 

Av. 

1902 

110.3 

112.6 

97-9 

money 

1903 

113.4 

114.5 

99.0 

wage  per 

W6CK 

1904 

112.3 

115.0 

97.6 

1912* 

$7.388 

1  Women  sixteen  years  of  age  and  over. 

2  Computed  from  Bulletins  128  and  134  of  the  United  States 
Bureau  of  Labor  Statistics. 

3  Estimated  from  Part  IV,  p.  645,  United  States  Census  of 
Manufactures  for  1905. 


THE  PEOPLE  OF  THE  UNITED  STATES       203 
TABLE  XLI 


INDICES  OF  THE  PRICE  OF  LABOR  PER  WEEK  FOR  MALE  WAGE 

EARNERS  IN  VARIOUS  INDUSTRIES. 

Weight* 

17 

2 

8 

i 

6 

Year. 

All  In- 
dustries. 

Rail- 
roading.1 

Manu- 
facturing.2 

Mining.8 

Agri- 
culture.4 

1890 

101.2 

99.1 

103.0 

98.3 

101.5 

1891 

101.9 

98.7 

102.4 

97.7 

103.0 

1892 

103.3 

101-4 

102.2 

110.3 

104.4 

1893 

102.2 

102.0 

102.1 

100.9 

102.8 

1894 

96.9 

99.3 

97-6 

95.6 

95.6 

1895 

97.8 

99.4 

97>7 

105.1 

96.4 

1896 

98.2 

99.5 

98.6 

S9.3 

97.1 

1897 

98.2 

99.3 

97.6 

102.5 

97.9 

1898 

98-6 

100.3 

98.6 

95.6 

98.6 

1899 

101.3 

100.9 

101.2 

94.6 

102.7 

1900 

104.3 

102.4 

104.1 

98.3 

106.4 

1901 

107.2 

102.9 

106.5 

105.1 

110.1 

1902 

110.9 

104.4 

110.4 

111.4 

113.9 

1903 

115.5 

109.1 

114.2 

116.7 

119.2 

1904 

117.7 

112.0 

112.4 

131.9 

124.4 

1905 

120.3 

112.5 

115.0 

124.0 

129.6 

1906 

126.1 

113.6 

120.4 

145.5 

134.7 

1907 

130.7 

1206 

125.5 

137.2 

140.0 

1908 

126.5 

122.8 

122.2 

122.4 

134.4 

1909 

125.8 

122.1 

122.6 

127.7 

131.0 

1910 

130.2 

125.8 

127.9 

136.1 

133.8 

1911 

132.3 

130.5 

128.7 

135.0 

137.6 

1912 

135.7 

132.3 

131.7 

142.4 

141.2 

Av.  money 

price  per 

week, 

1890-1899 

$  8.23 

S10.447 

$  9.708 

$11.31" 

$5.02 

Av.  1912 

$11.17 

13.81 

12.77" 

15.93s 

7.09 

1  Estimated    from  the  reports  of  the  Interstate  Commerce 
Commission. 


WEALTH  AND  INCOME  OF 


FIGURE  25 

AVERAGE  PRICES  OF  LABOR  PER  WEEK  IN  VARIOUS  INDUS- 
TRIES COMPARED  FOR  1894-1911, 
Continental  United  States. 


Price  of  Labor  in  Cents  Per  Hour 
o  o  5  En  8  K  8  81 

- 

X 

1 

- 

I 

£ 

1 

1 

." 

r 

i 

K 

? 

3 

1 

S 
5 
«! 

.*> 

X 

a 

£ 

I 

I 

I 

1 

3 

s 

& 
S 

i 

I 

.a 
1 

! 

1894 

1911 

Year 

2  Computed  from  the  bulletins  of  the  United  States  Bureau  of 
Labor. 

3  Estimated  from  the  Aldrich  Report,  Part  IV,  p.  1567,  from  the 
Second  Annual  Report  of  the  United  States  Commissioner  of  Labor, 
and  from  the  Reports  of  the  Bureaus  of  Labor  of  Pennsylvania, 
West  Virginia  and  Ohio. 

4  Estimated  from  the  bulletin  of  the  United  States  Department 
of  Agriculture  for  1910  written  by  George  K.  Holmes  on  The 
Wages  of  Farm  Labor;  also  from  Farmer's  Bulletin  584  of  the  same 
Department. 

6  Weighted  approximately  according  to  the  number  of  males 
employed  in  1900. 

6  Estimated  on  the  basis  of  the  figures  given  in  the  Census  of 
Manufactures  for  1905,  Part  IV,  p.  645. 

7  Estimated  on  a  basis  of  an  average  of  57  hours  per  week  hi 
the  base  decade. 

8  Computed  on  the  basis  of  the  United  States  Census  of  Mines 
and  Quarries  for  1902,  p.  99. 


THE  PEOPLE  OF  THE  UNITED  STATES   205 

remained  stationary  or  declined  slightly  during  the 
last  sixteen  years.  But  it  must  not  be  inferred  from 
this  that  the  present  condition  of  the  American  labor- 
ing class  is  bad  as  compared  to  that  of  the  working 
classes  elsewhere.  On  the  contrary,  the  workingman 
in  this  country  is  far  more  prosperous  than  in  most 
nations  of  the  globe.  We  have  seen  that,  in  1912,  his 
average  wage  in  all  industries  was  approximately  $11 
per  week.  If  we  figure  his  average  annual  employment 
as  49  weeks,  he  is  paid  in  the  neighborhood  of  $547  per 
year,1  by  no  means  a  princely  sum  but  more  than 
double  the  amount  earned  by  a  European  workman 
and  probably  four  times  what  the  laborer  of  China, 
Japan,  or  India  can  hope  to  receive.  When  we 
remember  that  this  is  supplemented,  in  a  very  large 
percentage  of  cases,  by  earnings  of  the  wife  or  children 
or  by  income  from  property,  the  income  of  the  average 
American  working  family  can  not  be  considered 
niggardly.  Education  has  intensified  the  worker's 
feeling  of  dissatisfaction  with  the  environment  by 
which  he  must  often,  perforce,  be  surrounded  but  it 
has,  at  the  same  time,  sharpened  his  appreciative 
faculties,  thus  increasing  the  amount  of  real  income 
derived  from  a  given  unit  of  expenditure.  The 
advent  of  the  motion  picture  has  furnished  an  exten- 

1  This  accords  fairly  well  with  the  estimate  of  Scott  Nearing 
in  Wages  in  the  United  States,  p.  208,  in  which  he  places  the 
average  annual  earnings  of  an  adult  male  worker  in  the  northeast 
quarter  of  the  United  States  at  $600. 


206  WEALTH  AND  INCOME  OF 

sive  field  of  enjoyment  at  comparatively  slight 
expense.  Other  consumers  beside  the  working  class 
have  been  compelled  to  share  in  the  expense  of  com- 
pensating unfortunate  workers  for  time  lost  because 
of  accidents.  The  decline  in  the  purchasing  power  of 
wages  has  also  been  offset  by  an  increased  income 
from  public  sources.  Better  streets  and  lights, 
better  hospitals,  better  libraries,  better  parks  and 
playgrounds,  and  better  schools  have  all  enhanced 
the  real  income  of  the  common  people,  and  the  tax- 
burden  of  the  ordinary  laborer  for  these  purposes  is 
comparatively  light. 

But  this  does  not  gainsay  the  fact  that  the  lot  of 
the  unskilled  laborer,  who  must  meet  the  competition 
of  the  new  arrival  from  abroad,  is  a  hard  one,  and, 
what  is  much  worse,  that  there  is,  under  present 
circumstances,  no  hope  of  bettering  his  condition  but 
rather  a  probability  that  it  will  steadily  grow  more 
unbearable  unless  he  is  protected  from  the  competition 
of  the  ill-paid  workers  of  Europe.  Furthermore,  the 
skilled  American  workman  is  sure,  sooner  or  later, 
to  feel  the  sympathetic  downward  pull  caused  by  low 
wages  in  unskilled  trades.  Always,  the  children  of 
the  unskilled  will  seek,  with  some  success,  to  enter 
his  trade  and  cut  the  wages  below  what  he  believes 
to  be  necessary  for  a  decent  existence.  And  it  is 
highly  improbable  that  union  walls,  no  matter  how 
strongly  built,  can  withstand  for  long  the  constant 


THE  PEOPLE  OF  THE  UNITED  STATES  .  207 

battering  carried  on  by  the  low-paid  throng  without. 
For  generations,  we  have  dallied  with  the  useless 
attempt  to  keep  up  the  price  of  labor  by  protecting 
commodities  against  foreign  competition,  all  unmind- 
ful of  the  teachings  of  economists  that  labor  could 
not  be  protected  by  duties  on  goods.  Meanwhile, 
our  statesmen  have  ignored  and  continue  to  ignore 
the  rather  simple  truth  that  the  "real"  wage  of  labor 
can  be  kept  up  only  by  protecting  our  workingmen 
directly  against  foreign  importations  of  labor.  With- 
out such  safeguards,  there  seems  to  be  no  reason  to 
suppose  that  we  can  prevent  the  wage  level  in  the 
United  States  from  settling  gradually  down  to  that 
of  Europe.  This  would  mean  a  ruthless  cut  in  wages 
all  along  the  line  with  a  consequent  breaking  down  of 
our  present  high  standards  of  living  and  the  forcing 
down  of  unskilled  labor  to  a  mere  subsistence  level, 
thus,  for  this  country,  turning  back  a  century  or 
more  the  hands  of  progress.  Against  the  continuance 
of  such  a  ruinous  policy,  it  has  become  the  duty  of 
every  patriotic  American  to  register  a  vigorous 
protest. 


CHAPTER  VIII 

THE  SHARE  OF  THE  CORPORATION  IN  THE  TOTAL 
NATIONAL  PRODUCT 

ONE  of  the  striking  features  of  the  evolution  of 
modern  industrial  society  has  been  the  development 
of  the  corporation.  The  only  statistics  in  this  field 
are  of  such  very  recent  origin  that,  except  for  the 
last  few  years,  no  quantitative  study  of  the  growth 
of  this  form  of  organization  can  be  presented  which 
can  lay  any  claim  to  accuracy.  From  the  United 
States  Census,  we  find  that,  during  the  decade  1899- 
1909,  the  fraction  of  the  mineral  output  produced 
by  corporation  owned  mines  increased  from  about 
85.0  to  92.2  per  cent,  while,  in  the  manufacturing 
field,  during  the  same  period,  corporations  increased 
their  share  of  the  value  added  by  manufactures  from 
approximately  63.3  to  77.2  per  cent.  We  know  that 
transportation  by  water,  rail,  and  wire  has  been 
mainly  carried  on  by  corporations  for  several  decades. 
In  commercial  enterprises,  the  general  impression  is 
that  the  stock  company  is  gradually  playing  a  more 
important  part  than  formerly.  Only  in  the  field  of 
agriculture,  does  the  individual  entrepreneur — the 
man  who  controls  and  directs  his  own  business — still 
remain  dominant  and  almost  without  corporate 

208 


THE  PEOPLE  OF  THE  UNITED  STATES   209 

rivals.  A  rough  estimate  indicates  that,  of  the  total 
products  of  American  industry  in  1899,  some  39 
per  cent,  or  approximately  seven  billion  dollars' 
worth,  and,  in  1909,  about  44  per  cent,  or  thirteen 
billion  dollars'  worth,  were  turned  out  by  corporation- 
owned  plants. 

Since  the  date  of  the  Thirteenth  Census,  the  evi- 
dence points  to  a  continuous  growth  of  corporation 
activity.  According  to  the  estimates  of  dividends 
and  interest  payments  given  monthly  by  the  New  York 
Journal  of  Commerce,  dividends  paid  by  the  larger 
corporations  have  increased  from  six  hundred  and 
twelve  millions  in  1909,  to  eight  hundred  and  eight 
millions  of  dollars  in  1913,  and  the  first  seven  months 
of  1914  show  an  increase  of  nearly  four  per  cent  over 
the  same  period  for  the  preceding  year. 

Interest  payments  made  by  corporations  seem  to 
be  advancing  at  even  a  more  rapid  rate,  having 
risen  from  seven  hundred  and  sixty  three  million 
dollars  in  1911  to  nine  hundred  and  thirteen  million 
dollars  in  1913,  and  the  disbursements  for  1914  are, 
apparently,  nearly  seven  per  cent  greater  than  those 
for  1913. 

The  total  net  income  of  the  corporations  of  the 
United  States,  according  to  the  returns  made  to 
the  revenue  authorities,  amounted,  in  1912,  to 
$3,213,707,247.  This  does  not  include  interest  paid 
on  indebtedness  but  it  is  a  generally  admitted  fact 
15 


210  WEALTH  AND  INCOME  OF 

that  the  bond  holder  is  merely  a  privileged  participant 
in  the  earnings  of  the  corporation.  Thus,  to  ascertain 
the  share  of  the  national  income  distributed  to 
the  public  through  corporate  agencies,  we  must  add 
in  the  interest  on  debts.  A  considerable  part  of  the 
net  revenue  of  every  well  managed  corporation  is 
used  in  building  up  the  physical  plant  of  the  company, 
in  increasing  the  working  capital  or  in  providing  for 
emergencies.  If  we  allow  that  30  per  cent  of  the 
entire  income  available  for  dividends  is  put  into 
improvements,  we  should  get  a  total  dividend  dis- 
bursement for  1912  of  $2,249,300,000.  The  cor- 
porations whose  payments  are  reported  for  1912  by 
the  New  York  Journal  of  Commerce  paid  out  $1.09 
in  interest  for  every  dollar  of  dividends.  If  we 
assume  this  same  rate  to  hold  for  all  corporations  in 
the  United  States,  their  total  payments  to  investors 
amounted,  in  1912,  to  about  $4,700,000,000. 

By  combining  these  rough  estimates  with  others 
of  a  like  nature,  we  obtain  the  following  table  which 
is,  of  course,  far  from  accurate  but  which,  neverthe- 
less, is  a  good  enough  approximation  to  illustrate 
some  of  the  principal  features  of  corporation  growth. 

The  main  conclusions  which  may  be  safely  drawn 
from  Table  XLII  are:  first,  that  the  corporation  is  a 
very  important  factor  in  the  productive  forces  of 
the  nation;  and,  second,  that  the  amount  of  the 
products  which  it  succeeds  in  retaining  and  distrib- 


THE  PEOPLE  OF  THE  UNITED  STATES   211 


uting  to  the  investors  in  corporation  securities  forms 
a  significant  and  constantly  increasing  fraction  of  the 
total  national  income.  Under  these  circumstances, 
it  is  not  surprising  that  questions  of  corporation 
control  have  played  so  important  a  part  in  the 
political  life  of  the  United  States  for  the  last  quarter 
century. 

TABLE  XLII 


ESTIMATED  RECENT  CHANGES  IN  CORPORATE  INCOMES. 

Year. 

Value  of 
Corpora- 
tion Prod- 
ucts in 
Millions 
of  Dollars. 

Percentage 
of  National 
Dividend 
Produced 
in  Corpo- 
ration 
Owned 
Plants. 

Payments  in  Millions  of 
Dollars  by  Corporations  to 
Investors. 

Percentage 
of  Total 
National 
Dividend 
Paid  by 
Corpora- 
tions to 
Investors. 

Total 

Interest 

Divi- 
dends. 

1899 
1909 
1912 
1914 

7,034 
13,351 

39.2 
43.7 

2,220 
4,214 
4,699 
4,781 

1,200 
2,341 
2,450 
2,620 

1,020 
1,873 
2,249 
2,161 

12.3 
13.8 

The  corporate  form  of  organization  has  been  both 
lauded  and  condemned.  Its  friends  have  maintained 
that  it  furnishes  the  ideal  method  of  suiting  the  con- 
venience of  investors.  Through  corporate  organiza- 
tion, it  is  possible  to  provide  securities  adapted  to  the 
most  conservative  or  to  the  most  speculative  investor. 
Furthermore,  the  man  with  one  hundred  or  the  man 
with  one  million  dollars  can  be  equally  well  accommo- 
dated. The  stocks  and  bonds  can  be  distributed 
among  tens  of  thousands  of  holders  and  yet  the 


212  WEALTH  AND  INCOME  OF 

centralization  of  management  in  a  small  board  of 
directors  gives  a  high  degree  of  efficiency  in  carrying 
on  its  business.  In  fact,  its  proponents  have  been  so 
favorably  impressed  with  this  simple  method  of 
control  that  they  have,  with  considerable  success, 
advocated  its  adoption  as  the  one  ideal  form  of  city 
government  and,  as  a  result,  we  see  commission 
governed  cities  on  all  sides. 

Indeed,  in  the  opinion  of  some  learned  men,  the 
corporation  furnishes  the  key  to  the  solution  of  other 
great  social  and  political  issues.  The  monopoly 
problem  disappears  when  the  stock  becomes  widely 
enough  distributed,  for,  then,  any  exorbitant  gains 
will  be  scattered  among  the  masses  of  the  people  as 
dividends  and  so  the  general  public  will  be  as  well  off 
as  if  the  monopoly  charged  low  prices  and  secured 
reasonable  profits  only.  Likewise,  the  labor  problem 
will  vanish  when  the  laborers  become  the  stockholders 
of  the  corporations  by  which  they  are  employed. 
If  the  corporation  should  set  wages  too  low,  dividends 
will  be  that  much  larger  and  the  employee-stock- 
holders will  gain  in  one  way  what  they  lose  in  another. 
If  the  hours  or  conditions  of  employment  are  unsatis- 
factory, the  workmen  can  complain  against  them- 
selves but,  if  they  strike,  they  will  lose  both  wages 
and  dividends,  hence,  no  such  disturbances  of  in- 
dustry will  occur.  And,  in  a  similar  manner,  the 
good  features  of  the  corporation  may  be  set  forth 
indefinitely. 


THE  PEOPLE  OF  THE  UNITED  STATES   213 

On  the  other  hand,  the  rabid  corporation-baiter 
denounces  the  stock  company  as  a  thing  without  a 
soul  whose  principal  function  appears  to  be  to  prey 
upon  the  public  and  to  override  the  wishes  of  the 
people  as  expressed  in  law. 

As  in  most  controversies,  there  is  a  measure  of 
truth  in  the  arguments  of  each  side.  It  is  only 
recently  coming  to  be  realized,  however,  that  the 
problems  of  the  corporation  are  largely  the  problems 
of  republican  government  in  general.  The  old-time 
corporation  with  a  dozen  members  has  little  more 
resemblance  to  the  great  modern  "octopus"  with  a 
hundred  thousand  share-holders  than  does  the  town 
meeting  to  the  American  Republic. 

It  has  only  been  in  recent  years  that  the  American 
people  have  come  generally  to  invest  their  savings  in 
the  securities  of  the  great  railways  or  industrial  con- 
cerns. The  result  has  been  a  tremendous  increase 
in  the  number  of  stockholders,  a  surprisingly  large 
share  of  the  smaller  investors  being  women. 

The  small  stockholder  has  far  less  voice  in  the 
management  of  the  corporation  than  he  has  in  con- 
trolling the  state  government.  He  receives  no 
enlightenment  concerning  the  policies  of  candidates 
for  the  Board  of  Directors.  No  opportunity  is 
given  him  to  cast  an  intelligent  ballot  unless  he 
happens  to  be  in  a  position  to  attend  the  annual 
meeting,  something  which  is,  of  course,  extremely 


214  WEALTH  AND  INCOME  OF 

unusual.  As  a  result,  he  contributes  his  funds  and 
then  trusts  to  the  good  faith  of  directors  over  whom 
he  has  no  control  whatever,  to  treat  him  fairly  in  the 
distribution  of  profits.  In  many  cases,  boards  of 
directors  have  dealt  justly  with  the  small  stock- 
holders; in  too  numerous  instances,  they  have,  by 
skillful  manipulations,  turned  everything  above  mini- 
mum gains  into  their  own  pockets  or  into  the  coffers 
of  the  controlling  stockholders.  And,  very  rarely 
indeed,  have  they  been  punished  or  even  compelled 
to  return  the  loot. 

Recent  exposures  have  caused  a  general  demand 
that  this  condition  of  affairs  be  remedied,  but  to 
find  adequate  means  of  so  doing  has  not  proved  easy. 
In  fact,  the  difficulties  in  the  way  of  securing  responsi- 
bility of  the  directors  to  the  minor  stockholders 
while,  at  the  same  time,  insuring  that  the  business 
will  be  efficiently  conducted,  seem  remarkably  similar 
to  those  involved  in  the  establishment  of  a  successful 
socialistic  state,  the  query  in  the  latter  instance 
being:  "How  is  it  possible  to  secure  efficiency  in 
administration  while  still  retaining  adequate  control 
for  the  people?"  For,  after  all,  the  great  corporation 
very  closely  resembles  a  state.  It  is  a  cooperative 
undertaking  in  which  many  thousands  unite  for  a 
common  benefit  and  delegate  their  interests  to  a 
central  government.  This  central  governing  body 
may,  in  either  case,  use  its  power  for  the  good  of  the 


THE  PEOPLE  OF  THE  UNITED  STATES   215 

people  whom  it  represents  or  it  may  selfishly  seize  the 
opportunity  to  enrich  itself  at  the  public  expense. 
The  directorate  may  make  war  on  rival  corporations 
while  the  governing  power  of  a  nation  may  declare 
war  on  other  states.  The  directors,  like  the  legis- 
lators or  administrators,  may  be  honest  or  dishonest, 
efficient  or  inefficient.  In  fact,  the  parallel  is  so 
close  that  it  seems  more  than  probable  that  whoever 
discovers  the  secret  of  combining  efficiency  in  adminis- 
tration and  effective  control  by  the  stockholders  of  a 
corporation  will,  at  the  same  time,  have  brought  to 
light  the  most  satisfactory  and  economical  system  of 
administering  industry  under  government  ownership. 

It  is  a  well  known  fact  that,  during  the  last  half 
century,  the  tendency  has  been  for  industry  to  become 
more  and  more  concentrated  and  integrated.  Most 
people  believe  that  there  are  immense  economies 
which  can  be  effected  only  by  very  large  scale  com- 
binations, and  many  are  confident  that  monopoly  is, 
as  a  rule,  the  most  economical  of  all  forms  of  control. 
Some  maintain,  however,  that  monopoly,  by  its 
carelessness,  sacrifices  more  than  it  gains  through  the 
elimination  of  the  wastes  of  competition. 

What,  then,  is  the  destiny  toward  which  our 
industrial  organization  is  tending?  Will  competition 
be  revived,  strengthened,  and  rehabilitated  by  the 
imposition  of  legal  restraint  upon  monopolistic 
activities?  On  the  other  hand,  will  the  present 


216  WEALTH  AND  INCOME  OF 

tendency  for  corporations  to  control  a  larger  and  larger 
fraction  of  our  industry  continue  until  the  individual 
entrepreneur  becomes  a  rarity?  Will  these  giant 
monopolistic  corporations,  owned  perhaps  by  the 
workers  in  the  industry,  control  whole  sections  of 
the  industrial  field?  Shall  we  see  the  sugar  industry, 
operated  as  one  tremendous  unit  in  which  all  persons 
interested  in  the  sugar  business  are  firmly  united, 
engage  in  terrific  economic  combats  with  the  similarly 
closely  knit  steel  trust  or  wheat  combine?  Will  these 
great  monopolies  overshadow  our  present  govern- 
ments based  on  geographic  units  so  that  we  shall  all 
owe  allegiance  to  an  industry  rather  than  to  a  state? 
Or  shall  we,  instead,  see  the  present  tendency  to  the 
extension  of  governmental  activities  continue  until 
all  industries  are  owned  and  operated  by  the  state  or 
nation  and  the  corporation  must  needs  disappear 
for  lack  of  activities  in  which  to  engage?  Or,  shall 
we  continue  to  have  the  present  mixture  of  monopoly 
and  competition,  of  individual,  corporate,  and  govern- 
mental control  of  industry?  These  questions  furnish 
an  interesting  field  for  speculation  but  interpretations 
of  present  tendencies  will  differ  widely  according  to 
the  beliefs  and  predilections  of  the  person  studying 
the  problem. 


CHAPTER  IX 

THE  DISTRIBUTION  OF  INCOME  AMONG  FAMILIES 

THE  last  two  chapters  covered,  in  a  general  way, 
the  distribution  of  income  among  industries  and 
factors  of  production.  In  this  chapter,  the  attempt 
will  first  be  made  to  classify  roughly  the  twenty- 
eight  millions  of  families  living  in  the  Continental 
United  States  according  to  the  income  which  each, 
respectively,  receives.  And  this  is  a  most  important 
classification  for,  indeed,  of  all  tests,  income  is  the 
best  single  criterion  of  economic  welfare.  Wealth 
is  a  better  safeguard  against  disaster.  It  sometimes 
is  a  more  effective  source  of  power.  But,  in  every 
day  experience,  no  other  quest  is  carried  on  so  assidu- 
ously as  that  for  the  maximum  income.  Income  will 
obtain  the  necessities,  comforts  and  luxuries  of  life. 
It  will,  if  saved,  lead  to  the  added  advantages  of 
wealth.  It  is  worth  while,  then,  to  know  who  gets 
the  thirty  billions  of  book  income  annually  distrib- 
uted among  the  people  of  the  United  States. 

THE  INCOME  SHARES  OF  THE  VARIOUS  CLASSES 

Unfortunately,  it  has  not  been  found  possible  to 
make  a  satisfactory  historical  investigation  of  this 
topic.  It  is,  however,  probable  that  something  may 

217 


218  WEALTH  AND  INCOME  OF 

be  inferred  from  a  study  of  Fig.  19  as  to  the  changes 
in  the  relative  distribution  which  have  taken  place. 
It  seems  almost  certain  that  a  fall  in  the  share  of 
wages  means  a  lessening  in  the  proportion  of  the  total 
income  received  by  the  working  classes  and  vice  versa, 
for  the  fraction  of  the  income  of  working  people 
obtained  from  other  sources  is  relatively  so  small  that 
changes  therein  would  hardly  offset  fluctuations  in 
the  wage  share.  If  this  assumption  is  true,  the  frac- 
tion of  the  total  income  going  to  the  favored  few 
decreased  during  the  period  1850  to  1890,  but,  since 
that  date,  has  been  on  the  increase.  We  would 
expect  that  the  freeing  of  the  slaves  and  the  breaking 
up  of  the  plantations  after  the  Civil  War  would  result 
in  a  much  more  equal  distribution  of  income.  The 
settlement  of  the  Mississippi  Valley,  with  the  resulting 
multiplication  of  valuable  farm  buildings,  would 
have  a  similar  effect.  On  the  other  hand,  the  recent 
growth  of  the  great  class  who  seem  destined  to  remain 
lifelong  wage-workers  in  the  employ  of  mammoth 
industrial  concerns,  would  tend  toward  less  uniform 
distribution.  But  the  greatest  force  in  the  last  three 
decades  making  for  income  concentration  has  been 
the  successful  organization  of  monster  corporations. 
The  promoters  and  manipulators  of  these  concerns 
have  received,  as  their  share  of  the  spoils,  permanent 
income  claims,  in  the  shape  of  securities,  large  enough 
to  make  Croesus  appear  like  a  pauper. 


THE  PEOPLE  OF  THE  UNITED  STATES  ..  219 

Thus,  while  the  belief  must  at  present  remain 
without  positive  verification,  there  is  considerable 
evidence  to  indicate  that  a  larger  fraction  of  the 
income  is  now  concentrated  in  the  hands  of  a  few  of 
the  very  rich,  than  was  the  case  twenty  years  ago. 
The  marked  stability  shown  by  the  distribution  of 
wealth  during  the  preceding  seventy  years  makes 
us  doubt,  however,  that  the  shift  in  the  relative 
shares  of  income  held  by  the  different  fractions 
of  the  population  has  been  so  great  as  to  be  at  all 
startling. 

The  only  serious  attempt  in  recent  years  to  study 
the  distribution  of  incomes  in  the  United  States  is 
that  admirable  compilation  and  analysis  of  sources 
made  by  Frank  H.  Streightoff  and  published  under  the 
title  "  The  Distribution  of  Incomes  in  the  United 
States,"  as  Number  2,  in  the  1912  volume  of  "  The 
Columbia  University  Studies."  1  In  this  monograph, 
Mr.  Streightoff  asserts  that  it  is,  at  present,  impossible 
to  give  any  accurate  picture  of  the  distribution 
of  incomes  among  the  population  as  a  whole.  The 
present  writer  is  heartily  in  accord  with  this  state- 
ment. True,  the  data  from  the  Wisconsin  income 
tax  compiled  by  Professor  Henry  M.  Trumbower  of 
the  University  of  Wisconsin,  have  yielded  much 
valuable  information  not  available  to  Mr.  Streightoff, 

1  The  reader  is  referred  to  this  work  for  much  valuable  source 
material  and  for  a  decidedly  good  bibliography. 


220  WEALTH  AND  INCOME  OF 

but  even  these  figures  are  subject  to  the  error  common 
to  all  statistics,  derived  from  assessment  reports,  of 
having  incomes  reported  below  the  actual  amounts. 
A  more  serious  weakness  lies  in  the  fact  that  the 
Wisconsin  data  fail  to  cover  satisfactorily  the  incomes 
below  $1800  and  these  lower  incomes  apply  to  the 
great  mass  of  the  population.  Nevertheless,  these 
statistics  have  aided  immensely  by  giving  an  inkling 
concerning  the  shape  of  the  distribution  curve  for 
the  incomes  of  the  middle  class  and  above.  Wiscon- 
sin, too,  is  a  peculiarly  good  sample  state  for  it  con- 
tains one  large  city,  many  smaller  cities  and  villages, 
and  much  agricultural  territory.  Its  per  capita 
wealth  is  about  equal  to  the  average  for  the  United 
States  as  a  whole.  It  is  located  neither  in  the  richest 
nor  the  poorest  section  of  the  country.  Under  the 
circumstances,  the  error  should  not  be  very  great  in 
considering  the  central  part  of  the  curve  for  Wis- 
consin as  fairly  representative  for  the  middle  class 
throughout  the  entire  nation  and  that  is  the  course 
which  has  been  adopted  in  making  the  estimates 
which  follow. 

The  United  States  Treasury  Department  and 
various  Congressional  committees  have  estimated 
the  incomes  of  the  very  rich  in  a  few  of  the  metro- 
politan cities  of  the  East.  Only  preliminary  reports 
from  the  National  income  tax  are  as  yet  available 
but  these  give  us  some  information  concerning  the 


THE  PEOPLE  OF  THE  UNITED  STATES   221 

incomes  of  that  very  small  section  of  the  people  who 
control  a  large  fraction  of  the  country's  wealth. 

Rather  abundant  material  can  be  found  dealing 
with  the  distribution  of  income  among  wage  earners, 
but  studies  of  the  income  of  the  high  salaried  classes 
and  of  the  entrepreneurs  are  rare  indeed.  Under  the 
first  head,  we  have  the  investigations  of  the  Bureaus 
of  Labor  of  the  United  States.  These  have  given  us 
much  information  concerning  the  distribution  of 
wages,  and  even  of  incomes,  among  the  families  of 
working  men.  They  have  been  supplemented  by 
such  private  studies  as  those  of  Chapin1  and  More2  for 
the  City  of  New  York. 

In  compiling  the  data  which  follow,  the  sources 
cited  above,  together  with  the  United  States  Census 
and  numerous  private  studies,  were  utilized  to  a 
greater  or  lesser  extent.  The  methods  followed  in 
combining  the  figures  were  mainly  graphic  and  were 
too  varied  to  describe  here.  Full  allowances  were 
made  for  the  changes  in  wages  occurring  between  the 
respective  dates  to  which  the  studies  applied  and 
1910,  for  the  earnings  of  other  members  of  the  family, 
for  income  from  investments,  and  for  unemployment. 
While  the  corrections  were  in  no  case  entirely  accu- 
rate, yet,  they  are  all  based  upon  the  results  of  careful 
investigations.  For  example,  the  trend  of  wages  was 

1  Chapin,  Robert  Coit,  The  Standard  of  Living  Among  Working- 
men 's  Families  in  New  York  City. 

3  More,  Mrs.  Louise  Boland,  Wage-Earner's  Budgets. 


222  WEALTH  AND  INCOME  OF 

taken  from  the  study  shown  in  Tables  XXXVIII  and 
XXXIX;  unemployment  was  corrected  by  the  use  of 
figures  taken  from  the  United  States  Census  of  Occu- 
pations. Earnings  from  the  other  sources  than  labor 
were  estimated  from  the  studies  recorded  in  the 
Eighteenth  Annual  Report  of  the  United  States  Com- 
missioner of  Labor.  No  pretense  is  made  that  the 
final  figures  are  accurate  but  they  will,  at  least, 
serve  as  a  starting  point  for  more  detailed  studies. 
Much  time  has  been  spent  in  collecting  and  adjusting 
data  and  in  reducing  all  errors  to  a  minimum.  The 
success  which  has  attended  these  efforts  must,  for  the 
present,  remain  more  or  less  problematical.  When 
Mr.  Streightoff  wrote,  he  was  correct  in  asserting  that 
the  material  was  insufficient  to  permit  of  any  general 
estimate  of  the  distribution  of  income  among  all 
American  families  and  the  truth  must  be  recognized 
that  any  accurate  tabulation  of  results  is  still  im- 
possible. But,  despite  unavoidable  errors,  due  to  the 
paucity  of  the  material  available,  it  is  believed  that, 
in  its  larger  aspects,  the  distribution  set  forth  in 
Table  XLIII  and  Figs.  26  and  27,  does  not  vary 
widely  from  the  truth. 

Any  classification  of  income  must,  necessarily,  be 
based  upon  receipts  of  families  rather  than  individuals 
for  it  is  by  families  that  incomes  are  received  and 
disbursed.  The  head  of  the  family  ordinarily  divides 
income  between  himself  and  his  various  dependents 


THE  PEOPLE  OF  THE  UNITED  STATES   223 

in  the  proportions  that  he  deems  best.  The  family, 
then,  acts  as  a  unit.  Some  families  consist  of  only 
one  person.  This  is  true  in  the  case  of  an  unmarried 
man  or  woman  who  is  self-supporting  and  yet  has 
no  dependents.  A  larger  number  of  families  consist 
of  a  husband  with  his  wife,  children,  and  perhaps 
dependent  relatives  or  a  widow  with  her  children. 

But  a  moment's  consideration  will  show  us  that  a 
given  family  income,  by  no  means,  denotes  a  uniform 
standard  of  prosperity.  This  is  especially  true 
because  of  the  different  numbers  dependent  thereon 
for  support.  A  single  man  or  woman  may  receive 
only  six  hundred  dollars  a  year  and  yet  maintain  a 
rather  high  standard  of  living  while  a  married  man 
with  six  children  may  find  it  difficult  to  keep  his 
family  in  decency  though  he  receives  a  salary  of 
twelve  hundred  dollars  per  annum.  This  shows  the 
desirability  of  classifying  families  according  to  their 
size  as  well  as  according  to  their  income. 

It  was  found  feasible  to  divide  the  families  of  the 
United  States  receiving  $1,400  or  less  into  three 
classes — viz.,  independent  single  men,  independent 
single  women,  and  families  with  dependents.  For 
families  with  larger  incomes,  this  separation  was  not 
made  but  it  may  be  remarked  that,  among  the  higher 
income  classes,  the  single  men  and  women  are, 
relatively,  much  less  numerous  than  in  the  very  low 
income  groups. 


224 


WEALTH  AND  INCOME  OF 


TABLE  XLIII 


THE  ESTIMATED1   DISTRIBUTION  OF   INCOME   AMONG   THE 

FAMILIES  OF  THE  CONTINENTAL  UNITED  STATES  IN  1910.8 

Number  of  Income  Receiving 
Units  in  Thousands. 

Total 
Income 

Cumula- 
tive* 
Number 

Cumu- 
lative 
Amoun 

Family  In- 

Men or 

of  Class 
in  Mil- 

of In- 
come Re- 

of 
Income 

come. 

Widows 

lions 

ceiving 

in  Mil- 

Single 

Single 

with- 

Total. 

of 

Units  in 

lions 

Men. 

Women 

Fami- 

Dollars. 

Thous- 

of 

lies. 

ands. 

Dollars. 

$     0-S200 

10 

10 

0 

20 

3 

20 

3 

200-  300 

150 

70 

50 

270 

72 

290 

75 

300-  400 

853 

560 

300 

1,713 

625 

2,003 

700 

400-  500 

1,575 

530 

560 

2,665 

1,239 

4,668 

1,939 

500-  600 

1,380 

280 

960 

2,620 

1,480 

7,288 

3,419 

600-  700 

970 

150 

2,470 

3,590 

2,388 

10,878 

5,807 

700-  800 

715 

110 

2,700 

3,525 

2,697 

14,403 

8,504 

800-  900 

600 

37 

2,100 

2,737 

2,327 

17,140 

10,831 

900-1000 

600 

22 

1,640 

2,262 

2,138 

19,402 

12,969 

1000-1100 

410 

16 

1,400 

1,826 

1,908 

21,228 

14,877 

1100-1200 

290 

12 

1,300 

1,602 

1,826 

22,830 

16,703 

1200-1300 

200 

8 

1,020 

1,228 

1,523 

24,058 

18,226 

1300-1400 

105 

5 

600 

710 

955 

24,768 

19,181 

1  Principal  sources  used  in  compiling  this  table: 
Trumbower,  Henry  M.,  Manuscript  study  of  The  Distribution  of 

Income  in  Wisconsin. 
Eighteenth  Annual  Report  of  the  United  States  Commissioner  of 

Labor. 
Estimates  by  the  Treasury  Department  for  the  Ways  and  Means 

Committee  of  the  House  of  Representatives.    April  22,  1913. 
United  States  Census  Reports: — Mining  1902.    Manufacturing, 

1900;    1905.    Electric    Railways,    1907.    Bulletins,    98;    94; 

Census  of  1900. 

Wage  Statistics  of  the  City  of  Chicago,  1902,  App.  A. 
Report  of  the  Superintendent  of  Public  Instruction  for  Michigan, 

1910. 
Report  of  the  Methodist  Conference  for  1910. 


THE  PEOPLE  OF  THE  UNITED  STATES       225 


TABLE  XLIII  (Cont.) 


THE  ESTIMATED  DISTRIBUTION  OP  INCOME  AMONG  THE 

FAMILIES  OF  THE  CONTINENTAL  UNITED  STATES  IN  1910. 

Total  In- 

Cumulative 

Family  Income 
in  Thousands 

Number  of 

come  of 
Class  in 

Cumulative 
Number  of 

Amount  of 
Income  in 

of  Dollars. 

Families. 

Millions  of 

Families. 

Millions  of 

Dollars. 

Dollars. 

1.4-     1.5 

475,000 

686 

25,243,000 

19,867 

1.5-     1.6 

385,000 

595 

25,628,000 

20,462 

1.6-     1.7 

308,000 

503 

25,934,000 

20,965 

1.7-     1.8 

243,000 

423 

26,177,000 

21,388 

1.8-    1.9 

189,000 

348 

26,366,000 

21,736 

1.9-    2.0 

142,000 

275 

26,508,000 

22,011 

2.0-    2.2 

200,000 

416 

26,708,000 

22,427 

2.2-    2.4 

167,000 

381 

26,875,000 

22,808 

2.4-    2.6 

141,000 

350 

27,016,000 

23,158 

2.6-    2.8 

115,000 

308 

27,131,000 

23,466 

2.8-    3.0 

94,000 

271 

27,225,000 

23,737 

3.0-    3.2 

77,000 

237 

27,302,000 

23,974 

3.2-    3.4 

63,000 

207 

27,365,000 

24,181 

3.4-    3.6 

52,000 

181 

27,417,000 

24,362 

3.6-    3.8 

43,000 

158 

27,460,000 

24,520 

3.8-    4.0 

36,000 

140 

27,496,000 

24,660 

4.0-    4.4 

59,000 

245 

27,555,000 

24,905 

4.4-    4.8 

49,000 

223 

27,604,000 

25,128 

4.8-    5.2 

40,000 

198 

27,644,000 

25,326 

5.2-    5.6 

32,000 

172 

27,676,000 

25,498 

5.6-    6.0 

25,000 

144 

27,701,000 

25,642 

6.0-    7.0 

46,000 

294 

27,747,000 

25,936 

7.0-    8.0 

33,000 

244 

27,780,000 

26,180 

8.0-  10.0 

38,000 

334 

27,818,000 

26,514 

10.0-  12.0 

22,000 

238 

27,840,000 

26,752 

12.0-  16.0 

31,000 

425 

27,871,000 

27,177 

16.0-  20.0 

20,000 

354 

27,891,000 

27,531 

20.0-  30.0 

20,000 

480 

27,911,000 

28,011 

30.0-  40.0 

12,000 

408 

27,923,000 

28,419 

40.0-  50.0 

7,000 

308 

27,930,000 

28,727 

50.0-100.0 

11,630 

794 

27,941,630 

29,521 

100.0-200.0 

3,145 

391 

27,944,775 

29,912 

16 


226 


WEALTH  AND  INCOME  Ob' 


TABLE  XLIII  (Cont.) 


THE  ESTIMATED1  DISTRIBUTION  OP  INCOME  AMONG  THE 

FAMILIES  OF  THE  CONTINENTAL  UNITED  STATES 

IN  1910.3 

Family  Income 
in  Thousands 
of  Dollars. 

Number  of 
Families. 

Total  In- 
come of 
Class  in 
Millions  of 
Dollars. 

Cumulative2 
Number  of 
Families. 

Cumulative 
Amount  of 
Income  in 
Millions 
of  Dollars. 

200-   1,000 

1,000-  2,000 
2,000-  5,000 
5,000-10,000 
10,000-50,000 

261 
98 
41 
10 
5 

126 
136 
118 
79 

158 

27,945,036 
27,945,134 
27,945,175 
27,945,185 
27,945,190 

30,038 
30,174 
30,292 
30,371 
30,529 

It  is,  perhaps,  worth  while  to  compare  the  income 
distribution,  as  estimated  in  Table  XLIV,  with  the 
figures  computed  in  1896  by  Dr.  Charles  B.  Spahr.4 

1  Continued — . 

Statistical  Abstract  of  the  United  States,  1911. 
Bulletin  295,  Cornell  University. 
Senate  Document  880;  Vol.  5,  p.  645. 

2  See  note  to  Table  X. 

3  Preliminary  reports  from  the  returns  of  the  United  States 
income  tax,  as  cited  in  The  Commercial  and  Financial  Chronicle 
for  October  24,  1914,  indicate  that  the  above  estimates  show  de- 
cidedly too  many  families  with  very  large  incomes.     The  author- 
ities of  the  Treasury  Department  believe,  however,  that  there 
have  been  wholesale  evasions  of  the  tax  by  the  richer  classes  and 
there  are  strong  indications  that  this  view  is  correct.     While  the 
inequality  in  income  distribution  is,  therefore,  probably  some- 
what less  than  indicated  by  this  table,  it  is  still  too  early  to 
decide  that  any  radical  revision  is  necessary  in  order  to  accord 
with  the  facts.     The  changes  in  the  Lorenz  curve,  corresponding 
with  estimates  based  on  the  Income  Tax  of  1913,  are  shown  hi 
Figs.  26  and  27. 

4  The  Present  Distribution  of  Wealth  in  the  United  States,  p.  128. 


THE  PEOPLE  OF  THE  UNITED  STATES   227 


According  to  his  table,  88  per  cent  of  the  people 
received  annually  less  than  $1,200  while  our  present 
estimate  puts  82  per  cent  of  the  families  in  that  class. 
He  calculated  that  1.6  per  cent  of  the  wealthiest 

FIGUEB  26 

A  COMPARISON  BY  LORENZ  CURVES  OF  THE  DISTRIBUTION  OP 
INCOME  IN  THE  UNITED  STATES  AND  PRUSSIA  WITH  THE  DISTRI- 
BUTION OF  WEALTH  IN  WISCONSIN,  PRUSSIA,  FRANCE,  AND  THE 
UNITED  KINGDOM. 


ioor 


100        90 


80         70         60         50         40          30         20 

Percentage  of  Families  or  Population 
Beginning  with  the  Poorest 


I.  Distribution  of  Income  indicated  by  U.  S.  Income  Tax 
Returns,  1913. 


228 


WEALTH  AND  INCOME  OF 


Percentage  o 
Total  Income 
Received  by 
Given  Class  o 
Families. 


.S  a 


y 
o 


ge 
com 
d  by 
ass 
es. 


Percen 
Total  I 
Receiv 
Given 
Fa 


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X 

o 

I 

= 

& 

1 

I 


THE  PEOPLE  OF  THE  UNITED  STATES   229 


I 


8   . 

fc  o 


2 

p 

§ 


tt 


ftfi 


I* 

Io 


rsiflg 


K!  TT-J 


IS 

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p     p     o     o     p     o     o 

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I-H        <N        10       O 


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T— I  T-i          T-4  W          CO  Tf  >O 


230 


WEALTH  AND  INCOME  OF 


received  over  $5,000,  while  the  figures  in  Table  XLIV 
show  only  1.2  per  cent  above  that  line. 

FIGURE  27 

A  COMPARISON  BY  LORBNZ  CURVES  OF  THE  DISTRIBUTION  OP 
INCOME  AMONG  THE  RICHEST  FAMILIES  IN  THE  UNITED  STATES 
AND  PRUSSIA. 


lual- 


100.0  99.9   99.8    99.7    99.6    99.5    99.4    99.3   99.2    99.1    99.0    98.9    98.8   98.7   98.6 
Percentage  of  Families  Beginning  with  the  Poorest 

If  the  figures  are  placed  on  a  percentage  basis,  in 
order  that  they  may  be  compared  with  Fig.  26,  Dr. 
Spahr's  calculation  would  show  88  per  cent  of  the 
people  receiving  65  per  cent  of  the  income  in  1896. 
The  present  writer's  estimate  for  1910  would  make 


THE  PEOPLE  OF  THE  UNITED  STATES   231 

the  same  percentage  of  the  population  absorb  about 
62  per  cent  of  the  income  stream.  Dr.  Spahr  believed 
that  1.6  per  cent  of  the  richest  families  secured  10.8 
per  cent  of  the  income  while  Fig.  27  would  indicate 
that  the  same  fraction  of  the  population  now  controls 
some  19  per  cent  of  the  income 

If  all  the  estimates  cited  are  correct,  it  indicates 
that,  since  1896,  there  has  occurred  a  marked  con- 
centration of  income  in  the  hands  of  the  very  rich; 
that  the  poor  have,  relatively,  lost  but  little;  but  that 
the  middle  class  has  been  the  principal  sufferer. 
This  evidence  of  increasing  concentration  would 
accord  with  the  inference  drawn  from  the  decreasing 
share  of  the  product  going  to  wages,  which  was  dis- 
cussed in  the  early  part  of  this  chapter. 

One  of  the  most  striking  things  brought  out  by  the 
Lorenz  curves  in  Fig.  26  is  the  marked  way  in  which 
the  distribution  of  wealth  and  income  differ,  the 
inequality,  in  the  case  of  income,  being  very  decidedly 
less  than  in  the  case  of  wealth.  For  instance,  the 
poorest  half  of  the  people  of  Wisconsin  own  but  two 
or  three  per  cent  of  the  wealth  but  they  receive  more 
than  one-fourth  of  the  income. 

From  Fig.  27,  we  see  that  the  richest  one  per  cent 
of  the  Prussian  people  own  only  19  per  cent  of  the 
income  while  Fig.  9  showed  that  they  possessed  about 
49  per  cent  of  the  wealth.  For  the  United  States, 
the  same  graphs  indicate  that  the  richest  hundredth 


232  WEALTH  AND  INCOME  OF 

of  the  people  possess  approximately  15  per  cent  of 
the  income  and  47  per  cent  of  the  wealth.  Whether, 
then,  we  consider  one  extreme  or  the  other,  we  ob- 
serve the  fact  that  income  is  far  more  equally  partici- 
pated in  than  wealth.  But  this  is  what  one  might 
expect,  after  all.  The  working  man,  commonly, 
receives  more  income  in  a  year  than  the  total  value 
of  his  possessions  while  the  rich  man's  income, 
being  composed  largely  of  rent,  interest,  and  dividends, 
will,  ordinarily,  constitute  but  three  to  ten  per  cent 
of  his  wealth.  Under  these  circumstances,  it  is 
practically  inevitable  that  income  distribution  must 
approach  much  closer  to  the  line  of  equality  than  does 
the  curve  of  wealth. 

It  was  shown  in  a  previous  chapter  that  there  was 
a  marked  similarity  in  the  relative  distribution  of 
wealth  in  Wisconsin  to  that  in  Prussia  and  France. 
It  likewise  seems  interesting  to  compare  the  distri- 
bution of  income  in  the  United  States  with  that  of  a 
European  country.  Prussia  is  the  only  important 
nation  of  Europe  publishing  income  statistics  in  a 
convenient  form  for  analysis.  A  considerable  amount 
of  estimating  was  necessary,  especially  in  the  case  of 
the  lowest  income  class,  in  order  to  reduce  the  statis- 
tics to  a  form  in  which  comparison  was  possible.  It 
is  believed,  however,  that  Tables  XLV  and  XL VI 
approximate  the  truth  rather  closely.  If  the  esti- 
mates are  correct,  the  curves  illustrating  the  relative 


THE  PEOPLE  OF  THE  UNITED  STATES   233 


TABLE  XLV 


THE  ESTIMATED  DISTRIBUTION  OF  INCOME  AMONG  THE 
PRUSSIAN  POPULATION  IN  1910.1 

Income  in  Marks  Per  Family. 

Number  of 
Persons  in 
Families 
'  of  Given 
Income. 

Income 
of  Entire 
Class  in 
Millions 
of  Marks. 

Per- 
cent^ 
age  of 
Total 
Popu- 
lation. 

Per- 
centage 
of  Total 
Amount 
of  In- 
come. 

Less  than  900  

17,203,000 
15,123,000 
5,470,000 
1,558,000 
289,000 
402,000 
96,000 
16,000 

4,7322 

6,435 
3,982 
2,076 
735 
2,035 
1,566 
1,247 

42.84 
37.66 
13.62 
3.88 
.72 
1.00 
.24 
.04 

20.75 
28.21 
17.46 
9.10 
3.22 
8.92 
6.87 
5.47 

900  and  under      1,500. 
1,500     '        "         3,000. 
3,000     '        "         6,500 
6,500     '        "         9,500. 
9,500     '        "       30,500. 
30,500     '        "     100,000. 
100,000  and  over  

Totals  

40,157,000 

22,808 

100.00 

100.00 

distributions  of  income  in  Prussia  and  the  United 
States  bear  as  close  a  resemblance  to  each  other  as 
did  those  for  the  same  nations  which  portrayed  the 
distribution  of  wealth.  This  gives  additional  evidence 
in  support  of  the  theory  that  the  relative  distribution 
of  wealth  and  income  is  dependent  rather  upon  the 
laws  governing  industry  than  upon  the  geography  or 
natural  resources  of  the  country  concerned.  This 
is  indicated  by  the  fact  that  the  relative  distribution 
is  very  similar  in  Prussia  to  that  in  the  United  States 
while,  at  the  same  time,  Prussia  is,  absolutely, 

1  Estimated  from  Die  Zeitschrifl  des  koniglichen  preussischen 
siatistischen  Landesamts,  1911,  pp.  4,  8-10,  xlvi-xlvii. 

2  Average  income  per  family  assumed  to  be  750  marks. 


234 


WEALTH  AND  INCOME  OF 


extremely  poor  both  in  wealth  and  income  as  com- 
pared to  its  American  neighbors.  The  comparisons 
will  be  more  clearly  brought  out  by  reference  to 
Table  XLVII  and  Figs.  28  and  29. 

TABLE  XLVI 


THE  ESTIMATED1  DISTRIBUTION  OF  INCOME  AMONG  THE 

PRUSSIAN  POPULATION  IN  1910. 

Thousands  of 

Amount  of 

Percentage 

Percentage 

Income  in  Marks  per 

Persons  in 

Income  in 

of  Total 

of  Total 

Family. 

Families  of 

Millions  of 

Popula- 

Amount of 

Given  Class. 

Marks. 

tion. 

Income. 

Less  than       900. 

17,203 

4,732 

42.84 

20.75 

1,500. 

32,326 

11,167 

80.50 

48.96 

3,000. 

37,796 

15,149 

94.  122 

66.42 

6,500. 

39,354 

17,225 

98.00 

75.52 

9,500. 

39,643 

17,960 

98.72 

78.74 

30,500. 

40,045 

19,995 

99.72 

87.66 

100,000. 

40,141 

21,561 

99.96 

94.53 

100,000  and  over  . 

40,157 

22.808 

100.00 

100.00 

For  the  sake  of  convenience,  the  population  has 
been  classified  into  exactly  the  same  divisions  used 
in  the  study  of  the  comparative  wealth  of  the  different 
nations.  Fig.  28  indicates  that,  while  the  total 
wealth  of  the  United  States  is  vastly  greater  than 
that  of  Prussia,  yet  the  various  relative  shares  are 
remarkably  similar,  the  chief  difference  being  that 

1  Computed  from  the  preceding  table. 

2  This  is  radically  different  from  the  figure  given  by  Mr. 
Streightoff   in   the   Columbia    University  Studies,   Volume   LII, 
Number  2,  p.  81.     He  there  estimates  56  per  cent  of  the  families 
to  receive  less  than  2,700  marks  annual  income.     It  would  seem 
that  the  figure  should  be  much  nearer  90  per  cent. 


THE  PEOPLE  OF  THE  UNITED  STATES   235 


the  lower  middle  class  in  Prussia  possesses  a  little 
smaller  fraction  and  the  upper  middle  class  a  little 
larger  portion  than  the  corresponding  sectors  repre- 
senting the  same  classes  of  the  population  of  the 
United  States. 

TABLE  XLVII 


THE  MONEY  INCOME  OF  DIFFERENT  FRACTIONS  OF  THE 
POPULATION  IN  PRUSSIA  AND  IN  THE  UNITED  STATES 
IN  1910.1 

Class  of  Population. 

Country, 

Percentage 
of  Total 
Income  Re- 
ceived by 
Class. 

Average 
Income 
Per  Capita 
in  Dollars. 

Ratio  of 
Income  to 
that  of  the 
same  Class 
in  the 
United 
States. 

Poorest,  65  per 
cent. 

Prussia  

35.8 

38.6 

74 
197 

37.8 
100.0 

United  States  . 

Lower  middle 
class,  65-80 
per  cent. 

Prussia  

12.7 
14.2 

114 
314 

36.4 
100.0 

United  States  . 

Upper  middle 
class,  80-98 
per  cent. 

Prussia  

27.0 
26.8 

203 
494 

41.0 
100.0 

United  States  . 

Richest,  2  per 
cent. 

Prussia  

24.5 
20.4 

1,656 
3,386 

48.9 
100.0 

United  States  . 

All  classes 

Prussia  

100.0 
100.0 

135 
332 

40.7 
100.0 

United  States  . 

The  richest  fifth  of  the  families  in  each  country 
claims  about  half  the  income — in  Prussia  the  fraction 
being  a  trifle  more,  and  in  the  United  States  a  trifle 
less. 

1  Computed  from  Tables  XLV  and  XLVI. 


236 


WEALTH  AND  INCOME  OF 


FlGUKE  28 

TOTAL  MONEY  INCOME  OF  THE  PEOPLE  OF  PRUSSIA  AND  THE 
UNITED  STATES  AS  DIVIDED  AMONG  THE  DIFFERENT  FRAC- 
TIONS OF  THE  POPULATION. 


Prussia 


United  States 


AVERAGE  INCOMES  IN  DIFFERENT  NATIONS 
So  much  for  the  similarities.  The  differences  ap- 
pear when  we  compare  the  absolute  amounts  as  is 
done  in  Fig.  29.  This  illustration  shows  us  that  every 
fraction  of  the  American  people  possesses  double  or 
nearly  treble  the  income  of  the  corresponding  classes 
in  Prussia — and  yet,  we  Americans  complain  greatly 
of  poverty! 

The  British  Board  of  Trade  reports  show  that  in 
the  two  countries  the  prices  are  not  materially 
different  for  most  articles.  House  rent  and  vegetables 
are  two  items  that  are  cheaper  in  Prussia  and  with 
potatoes  to  eat  and  a  roof  over  its  head,  a  family 


THE  PEOPLE  OF  THE  UNITED  STATES       237 

FIGURE  29 

AVERAGE  PER  CAPITA  MONET  INCOME  OP  EACH  FRACTION  OF 
THE  POPULATION  IN  PRUSSIA  AND  THE  UNITED  STATES 


HW 

3000 

2500 

• 

i 

i 

a 

1 

8    150° 

. 

| 

M 

|    WOO 

b 

• 

£ 

600 
0 

n  1         n  1         n  1 

nl 

P.     U.B.                      P.     U.S.                      f.     U.B. 

'.     U.B.                    f.     U.b. 

Poorest       Lower  Middle  Upper  Middle 
65                   Class                Class 
PerOent             66-80                80-98 
Ter  Cent          Per  Cent 

Richest                 All 
2                    Classes 
Per  Cent 

can  live.  Yet,  Prussia  is  not  counted  one  of  the  poor 
nations  of  Europe.  Austria,  Russia,  Italy,  Spain, 
and  the  Balkan  States  would  doubtless  make  a 
much  less  favorable  showing.1  And  what  is  the  reason 

1  Mr.  Streightoff  estimates  in  Columbia  University  Studies, 
Volume  LII,  Number  2,  p.  87,  that  80  per  cent  of  the  English 
families  have  incomes  of  less  than  £140  or  $681.  In  the  United 


238  WEALTH  AND  INCOME  OF 

for  their  poverty?  •  They  have  fertile  soil,  rich  mines, 
and,  in  most  cases,  extensive  forests.  What  is  lack- 
ing? To  answer  this  query  is  to  touch  upon  the  funda- 
mental basis  of  economic  welfare — the  control  of 
population,  and  it  is  necessary  to  clear  this  up  before 
we  can  discuss  intelligently  the  question  of  income 
distribution. 

THE  RELATION  OF  AVERAGE  INCOME  TO  POPULATION 
DENSITY 

Given:  a  nation  with  a  definite  supply  of  resources 
and  a  certain  stage  of  progress  in  science  and  the 
arts,  there  is  always  a  definite  population  which  can 
utilize  these  advantages  in  such  a  way  as  to  secure 
maximum  average  benefits  for  all.  When  population 
is  very  sparse,  too  large  a  fraction  of  the  energy  of 
the  people  is  spent  in  transporting  things  from  place 
to  place,  owing  to  the  necessarily  long  distances  inter- 
vening between  settlements  and  the  poor  transporta- 
tion facilities  which  a  light  traffic  will  make  worth 
while.  The  demand  for  goods  will  be  too  small  to 
make  possible  the  savings  of  effort  resulting  from 
large  scale  production.  The  people  will  be  too  few 
to  enable  them  to  maintain  a  national  government 
powerful  enough  to  command  the  respect  of  other 

States,  according  to  Table  XLIV,  39  per  cent  have  incomes  as 
low  as  $700.  He  calculates  that  90  per  cent  in  England  have  less 
than  $1022  per  family  while,  in  the  United  States,  our  estimates 
show  only  about  44  per  cent  below  this  mark. 


THE  PEOPLE  OF  THE  UNITED  STATES        239 

nations.  It  is  impossible  to  construct  imposing  public 
buildings  or  extensive  public  improvements.  The 
real  income  of  society  is  not  augmented  by  the  ad- 
vantages of  social  life  brought  about  through  prox- 
imity to  one's  neighbors.  In  short,  the  country 
suffers  from  the  hardships  commonly  associated  with 
frontier  life. 

When,  however,  the  most  fertile  lands  have  been 
largely  occupied;  when  mines  are  being  operated  by 
most  modern  methods;  when  magnificent  canals  and 
railways  make  easy  the  interchange  of  the  various 
products  necessary  for  civilized  comfort;  when  huge 
factories,  equipped  with  the  latest  inventions,  turn 
out  multitudinous  products;  when  the  government  is 
strong  and  powerful  enough  to  afford  protection 
against  foreign  foes;  then,  an  increase  of  population 
merely  means  a  decrease  in  the  general  welfare.  If 
more  people  must  be  supported,  poorer  lands  must 
be  utilized;  mines  must  be  dug  deeper  and  poorer 
grades  of  ore  extracted;  the  cities  become  more  and 
more  crowded;  and,  in  accordance  with  the  well- 
known  law  of  diminishing  returns,  less  and  less  real 
income  is  obtained  in  exchange  for  an  hour's  labor  by 
the  average  man.  The  density  of  population  which 
a  spacious  nation  like  the  United  States  needs  in 
order  to  secure  the  maximum  per  capita  real  income 
is  not  great.  The  bringing  into  cultivation  of  poorer 
lands  and  the  operation  of  less  productive  mines 


240  WEALTH  AND  INCOME  OF 

indicates,  in  general,  economic  retrogression  rather 
than  progress.  Under  these  circumstances,  the  only 
gain  from  large  numbers  is  that  the  government  is 
enabled  to  raise  a  larger  army,  and  even  this  military 
gain  is  partially  offset  by  the  decrease  in  financial 
ability  resulting  from  the  poverty  of  the  people. 
Besides,  the  crowding  of  the  inhabitants  breeds 
discontent  and  desire  for  the  conquest  of  new  terri- 
tory, thus  often  leading  to  war  when,  otherwise,  peace 
would  prevail.  It  should,  therefore,  be  the  aim  of 
every  nation  to  keep  its  population  at  that  number 
which  is  found  to  result  in  the  greatest  amount  of 
real  income  to  the  average  citizen.  As  a  nation 
grows  older  and  its  natural  resources  are  depleted, 
the  population  should  be  correspondingly  decreased 
unless,  in  the  meantime,  the  increasing  difficulties  of 
securing  nature's  treasures  have  been  offset  by  newly 
discovered  methods  of  extraction.  The  constant 
increase  of  population  going  on  in  the  crowded  nations 
of  the  globe  is,  therefore,  directly  in  opposition  to 
the  welfare  of  their  people.  The  facts,  then,  which 
should  be  clearly  kept  in  mind  are: 

1.  Every  nation  should  maintain  its  numbers  at 
that  point  found  to  give  the  maximum  average  real 
income. 

2.  Natural  resources  are  beyond  human  control; 
therefore,  population  is  the  factor  in  which,  neces- 
sarily, the  required  adjustment  should  take  place. 


THE  PEOPLE  OF  THE  UNITED  STATES       241 

Human  history,  however,  shows  that  these  rules, 
so  essential  to  the  general  welfare,  have  rarely  been 
comprehended — much  less  carried  into  effect.  Even 
yet,  the  majority  of  people,  including  some  econo- 
mists, believe  population  to  be  something  beyond 
control  the  regulation  of  which  must  be  left  to  the 
tender  mercies  of  Fate.  Efforts  are  made  almost 
wholly  in  the  direction  of  stretching  further  the 
gifts  of  nature.  In  China,  the  forests  have  been 
stripped  from  the  mountains,  the  lowlands  have  been 
diked,  the  swamps  drained,  and  still,  when  floods 
do  come  or  when  the  crops  are  a  little  short,  the  people 
die  like  flies  during  a  frost.  This  is  the  result  of  the 
failure  to  recognize  the  inevitable  laws  of  population. 
Even  in  England  and  the  United  States  we  hear  a 
ceaseless  clamor  that  all  the  land  be  given  to  the 
people.  If  every  great  estate,  every  park,  every 
woodland  were  opened  to  cultivation,  the  people 
would  soon  be  in  worse  condition  and  not  better  off. 
The  timber  supply  would  be  lessened;  floods  would 
be  more  severe;  and,  worst  of  all,  the  scenic  beauty — 
one  of  Nature's  richest  gifts  to  mankind — would  be 
marred  or  destroyed.  It  cannot  be  too  strongly 
emphasized  that  the  setting  aside  of  great  areas  for 
parks  or  pleasure  grounds  does  not,  ordinarily,  in  any 
way  diminish  the  prosperity  of  the  common  people 
but  only  lessens  their  numbers.  To  see  this  fact 

17 


242  WEALTH  AND  INCOME  OF 

clearly,  we  must  thoroughly  understand  the  laws  of 
population. 

It  was  Thomas  R.  Malthus  who,  almost  a  century 
ago,  clearly  set  forth  those  great  laws  which  have  been 
persistently  misquoted  and  railed  against,  but  which 
have  stood  like  adamant  against  all  attacks  and  have 
remained  to  put  to  scorn  all  their  assailants.  Malthus 
pointed  out  that,  in  all  countries  in  the  lower  stages 
of  civilization,  population  was  controlled  just  like 
the  number  of  weeds  in  an  abandoned  field — the 
weaker  ones  are  choked  out  until  there  is  room  enough 
for  the  stronger  to  survive  in  comfort.  In  the  past, 
the  great  masses  of  the  people  of  all  nations  have 
lived  on  the  subsistence  level.  Three  children  were 
born  to  one  that  survived.  Every  crop  shortage 
meant  famine  and  pestilence.  Any  excess  of  popu- 
lation died  of  famine,  gained  a  new  food  supply  by 
war,  or  perished  in  the  attempt  to  secure  sustenance. 
Thus  population  was  fitted  to  the  supply  of  sub- 
sistence by  positive  checks,  e.  g.,  war,  starvation, 
disease,  and  pestilence. 

But,  he  also  showed  that,  in  a  few  of  the  more 
enlightened  countries  and  among  the  better  edu- 
cated classes  of  the  people  in  many  nations,  the 
population  was  deliberately  limited  to  such  an  extent 
as  to  enable  the  children  not  barely  to  subsist  but  to 
live  according  to  a  certain  standard  of  comfort  set 
by  the  social  class  of  which  the  parents  were  members. 


THE  PEOPLE  OF  THE  UNITED  STATES       243 

A  man  of  the  upper  classes  considered  the  maintenance 
of  his  standard  of  living  preferable  to  marriage  and 
the  rearing  of  children.  Under  these  circumstances, 
certain  preventive  checks  were  used  to  keep  the 
number  of  children  from  becoming  greater  than  could 
be  supported  in  the  manner  customary  to  the  class 
to  which  the  parents  belonged.  In  some  regions, 
men  were  not  allowed  to  marry  until  there  was  a 
vacant  house  in  the  village.  More  commonly,  the 
prevailing  opinion  of  his  associates  prevented  a  man 
marrying  until  he  could  assure  a  wife  proper  support 
and  late  marriages  tended  towards  small  families. 
In  many  other  instances,  the  number  of  births  was 
deliberately  regulated  by  the  parents. 

Malthus  went  on  to  show  that,  as  a  rule,  it  was  only 
possible  for  any  nation,  or  any  class  of  people  in  a 
nation,  to  emerge  from  the  depths  of  poverty  and 
degradation  when  they  decided  to  substitute  pre- 
ventive for  positive  checks  as  the  method  of  controlling 
their  numbers.1  He  hoped,  but  hardly  dared  to 
expect,  that,  some  day,  even  the  lower  classes — the 
common  working  people — would  take  this  tremendous 
step  in  advance  and  thus  strike  off  the  shackles  which 
bound  them  to  a  life  of  miserable  toil. 

A  clear  comprehension  of  these  principles  enables 

1  An  admirable  article  in  this  connection  is  that  by  the  able 
economist,  Professor  Thomas  N.  Carver,  entitled  How  Ought 
Wealth  to  be  Distributed?  It  may  be  found  in  the  Atlantic 
Monthly,  Volume  XCVII,  p.  727. 


244  WEALTH  AND  INCOME  OF 

us  to  understand  that  the  regulation  of  the  population 
of  a  nation  is  not  the  impossibility  that  many  learned 
men  have  believed  it  to  be.  On  the  contrary,  the 
numbers  tend  to  be  automatically  regulated  by  the 
existing  stage  of  culture.  Among  the  uneducated, 
lust  is  the  dominant  passion  and  it  always  tends  to 
keep  the  number  of  mouths  to  be  fed  a  little  larger 
than  the  food  supply — in  other  words  a  considerable 
share  of  the  inhabitants  are  always  starving  or  on  the 
verge  of  starvation.  Education,  however,  works  a 
revolution.  It  makes  ambition  the  ruling  motive  of 
men's  lives  and  wealth  is  necessary  in  order  to  satisfy 
ambition.  To  gain  wealth  and  luxury,  children  must 
be  few.  The  average  size  of  the  family  is  reduced  to 
such  an  extent  that  the  population  is  likely  to  approxi- 
mate the  number  required  to  secure  the  maximum 
per  capita  income  obtainable  from  the  resources  of 
the  region.  If,  then,  migration  from  without  is 
prevented,  education,  alone,  acts  as  an  automatic 
regulator  of  the  most  beneficent  and  powerful  type 
and  by  supplementing  its  effects  to  some  degree  by 
eugenic  legislation  a  nation  may  reasonably  be 
expected  to  approach  ideal  conditions  as  regards  the 
number  of  its  people. 

Only  in  the  last  few  decades  and  in  a  small  number 
of  the  most  progressive  nations  has  there  been  reason 
to  believe  that  the  dreams  of  Malthus  would  yet 
come  true  and  that  the  great  common  people  might 


THE  PEOPLE  OF  THE  UNITED  STATES       245 

eventually  reach  that  stage  of  enlightenment  in  which 
they  would  almost  universally  substitute  the  pre- 
ventive for  the  positive  checks,  thus  releasing  them- 
selves from  the  bonds  of  poverty  and  ushering  in  a 
new  era  of  democracy — an  era  of  general  prosperity 
and  progress. 

From  the  beginnings  of  history  down  nearly  to  the 
present  time,  the  overwhelming  majority  of  the 
people — just  like  the  beasts  of  the  field — have  had 
their  numbers  governed  wholly  by  positive  checks, 
hence  have  lived  on  the  subsistence  level.  Even 
yet,  most  of  Asia  and  large  sections  of  Europe  are  in 
this  stage  of  progress.  Indeed,  we  have  too  large  a 
fraction  of  the  population  in  our  own  country  who 
still  multiply  up  to  the  limits  of  subsistence. 

As  has  been  pointed  out,  progress  is  not  a  continuous 
possibility  as  long  as  this  stage  of  civilization  prevails. 
A  people  can  permanently  advance  only  when  it 
substitutes  what  Malthus  called  the  preventive  checks 
in  place  of  the  positive  checks.  True,  a  nation  may 
occupy  new  and  unsettled  territory  and,  without 
any  restraint  on  population,  for  a  time  grow  rich  and 
powerful.  But  if,  in  the  interim,  the  standards  of 
living  are  not  so  elevated  that,  when  the  necessity 
arises,  the  size  of  the  family  will  be  limited  to  that 
which  the  family  income  can  support  in  comfort, 
nothing  can  hinder  a  return  to  degradation. 

We  send  ship  loads  of  food  to  China  and  India  to 


246  WEALTH  AND  INCOME  OF 

allay  the  famine,  all  unaware  that  we  are  simply 
putting  off  the  inevitable  day  of  starvation  for  some 
part  of  the  population.  To  attempt  to  better  the 
economic  condition  of  the  masses  of  those  nations 
without  lowering  their  birth  rate  is  as  hopeless  a 
task  as  trying  to  stamp  out  typhoid  fever  while  still 
supplying  the  people  with  water  laden  with  the  deadly 
germs.  Within  reasonable  limits,  a  nation's  perma- 
nent economic  welfare,  then,  depends  but  little  on 
whether  the  soil  is  rich  or  sterile,  the  mines  pro- 
ductive or  exhausted,  but,  on  the  contrary,  it  is  based 
almost  wholly,  on  the  question  as  to  whether  the 
masses  of  the  people  have  passed  over  the  deep  but 
narrow  gulf  which  separates  the  control  of  population 
by  a  standard  of  living  from  that  condition  in  which 
it  is  limited  only  by  the  means  of  subsistence,  for  it  is 
the  crossing  of  this  gulf  which  substitutes  reason  in 
place  of  the  animal  instincts. 

The  fertile  wilderness  to  which  our  forefathers 
migrated  afforded  an  almost  unparalleled  opportunity 
for  the  progress  of  the  race.  By  no  possibility,  could 
they  overpopulate  this  vast  territory  short  of  several 
generations.  And  the  riches  thus  thrust  upon  them 
built  up  new  economic  ideals — a  worthy  standard  of 
comfort  which,  it  is  to  be  earnestly  hoped,  we  shall 
always  maintain  and  improve.  The  European  nations 
were  not  so  favored  and,  hence,  they  have  made  much 
less  progress  in  the  fight  to  escape  from  the  chains  of 


THE  PEOPLE  OF  THE  UNITED  STATES   247 

want  forged  by  their  own  uncontrolled  passions. 
The  French  people  have  seen  the  light  and  placed 
their  numbers  on  a  static  basis.  In  other  European 
nations,  the  falling  birth  rate  shows  that  a  larger  and 
larger  section  of  the  population  are  crossing  the  chasm 
and  joining  the  forces  of  progress — the  great  army  of 
democracy  which  chooses  a  decent  living  for  its  off- 
spring rather  than  the  rearing  of  countless  millions 
to  perish  before  the  cannon's  mouth  in  the  struggle  for 
food.  When  each  nation  has  learned  how  to  regulate 
its  population  in  accordance  with  the  resources  avail- 
able for  their  support,  one  of  the  prime  reasons  for 
encroaching  upon  the  territories  of  other  powers  will 
have  disappeared  and  a  long  step  will  have  been 
taken  in  the  direction  of  world  peace. 

And  the  degree  to  which  a  nation  has  progressed 
may  easily  be  measured  by  the  poverty  or  affluence 
of  the  common  people.  China  and  India,  with  their 
fertile  plains  and  valleys,  retain  their  high  birth  rate 
and  the  masses  are  never  far  from  starvation.  In 
most  of  Europe,  the  birth  rate  is  somewhat  lower, 
and  the  people  are  beginning  to  enjoy  a  few  comforts. 
In  the  United  States,  Canada,  and  Australasia,  the 
native  born  population  has  a  rigorously  controlled 
birth  rate  and  the  people  are  the  most  prosperous  of 
the  world. 

And  this  leads  us  back  to  the  subject  of  the  distri- 
bution of  income  in  the  United  States.  Fig.  29  shows 


248  WEALTH  AND  INCOME  OF 

us  that  the  rich  have  much  while  the  poor  have  little. 
Shall  we,  then,  take  from  the  rich  and  give  to  the 
poor  by  some  roundabout  legal  process?  When  dis- 
cussing wealth,  we  brought  out  the  fact  that  the  rich 
were  great  savers  and  so  accumulated  much  of  the 
capital  which  enables  the  nation  to  gain  a  large  income 
to  distribute.  Any  system  which  threatens  to 
diminish  saving  is  to  be  looked  upon  with  alarm  for 
its  long  time  effects  are  certain  to  be  injurious  to 
society  at  large. 

But  the  rich  are  great  spenders  as  well  as  great 
savers.  They  waste  millions  upon  millions  in  wanton 
display,  while  the  widow  and  orphan  starve  a  mile 
from  their  doors.  Is  this  right?  Shall  we  continue 
to  allow  it  to  go  on? 

The  socialists  would  solve  the  problem  by  letting  the 
government  do  the  saving  and  abolishing  all  swollen 
incomes.  This  settles  the  question  of  the  rich.  Does 
it  benefit  the  poor? 

The  problem  of  the  poor  is  the  vital  point  of  the 
whole  question  of  distribution.  We  have  always  had 
the  poor  with  us — must  we  always  have  them? 
Table  XL VII  shows  that,  in  the  United  States,  we 
produce  each  year  an  income  of  some  $332  per  capita 
or  about  $1,500  per  family.  If  this  were  equally 
distributed,  none  would  be  in  poverty,  none  would  live 
in  affluence.  But  how  long  would  this  condition  last? 
As  long  as  we  have  any  considerable  section  of  our 


THE  PEOPLE  OF  THE  UNITED  STATES       249 

people  who  have  not  yet  substituted  a  high  standard 
of  living  for  the  subsistence  plane,  added  income  for 
the  poor  would  merely  mean  more  rapid  multipli- 
cation of  the  lowest  and  least  desirable  classes.  In  a 
few  years,  the  poverty  would  be  as  great  as  before 
and  the  average  intelligence  and  prosperity  of  the 
whole  people  would  have  been  greatly  reduced. 

Of  recent  years,  organized  charity  has  taught  us 
not  to  distribute  alms  without  careful  consideration. 
The  eugenists  are  just  beginning  to  impress  upon  us 
the  absurd  folly  of  breeding  great  troops  of  paupers, 
defectives  and  criminals  to  be  a  burden  upon  organized 
society. 

We  may  conclude,  therefore,  without  reservation, 
that  to  take  from  the  rich  and  give  indiscriminately 
to  the  poor  would  injure  and  not  benefit  the  nation 
as  a  whole.  The  levelling  down  process  can  only  be 
helpful  in  so  far  as  the  income  taken  from  the  rich  is 
used  to  educate  and  thus  stimulate  the  ambition  and 
elevate  the  standard  of  living  of  the  poor.  If  used 
merely  to  increase  the  wages  of  the  lowest  class,  the 
long  time  effects  might,  eventually,  be  no  better  than 
to  have  it  spent  for  steam  yachts  or  million  dollar 
balls. 

Of  late,  we  have  heard  a  tremendous  demand  from 
would-be  social  reformers  for  a  "living  wage."  We 
hear  the  employers  on  all  sides  denounced  as  heartless 
villains  because  they  do  not  pay  enough  to  allow 


250  WEALTH  AND  INCOME  OF 

their  employees  to  live  in  decency  and  comfort.  But 
this  sentiment  seems  to  arise  from  a  superficial  analysis 
of  the  difficulty.  Why  are  the  employees  not  in  a 
position  to  demand  a  satisfactory  return  for  their 
services?  Whose  fault  is  it?  And  the  ultimate 
blame  must  be  laid  not  upon  their  employers  but 
upon  the  parents  and  grandparents  of  the  workers 
themselves.  Why  did  these  ancestors  of  the  present 
generation  bring  into  the  world  children  whom  they 
could  afford  neither  to  educate  nor  to  train  for  some 
occupation  the  products  of  which  were  sufficiently 
in  demand  to  make  a  living  wage  easily  secured? 
Why  indeed!  Simply  because  these  same  parents 
and  grandparents  were  either  incompetent,  ignorant, 
or  unwilling  to  restrain  their  animal  passions.  Here 
we  have  an  excellent  example  of  "visiting  the  iniquity 
of  the  father  upon  the  children  unto  the  third  and 
fourth  generation."  But  this  fact  is  not  recognized 
by  many  of  the  radical  "social  uplifters"  of  the 
present  day  and,  as  a  result,  we  hear  American 
employers  and  American  society  in  general  denounced 
is  unmeasured  terms  for  misdeeds  committed  across 
the  ocean  by  men  the  most  of  whom  are  long  since  in 
their  graves.  Yes,  we  should  have  a  living  wage,  but 
we  shall  not  get  it  by  demanding  that  people  pay  for  a 
limitless  supply  of  labor  which  does  not  know  how 
to  produce  the  articles  and  services  which  consumers 
are  willing  to  buy.  The  situation  may  be  remedied 


THE  PEOPLE  OF  THE  UNITED  STATES   251 

by  scientific  treatment  of  the  causes  but  never  by 
bitter  invective  and  passionate  denunciation  of  those 
who  are  not  primarily  to  blame.  The  price  of  any 
sort  of  labor  will  go  up  easily  and  naturally  enough 
when  the  supply  of  that  special  kind  of  labor  becomes 
scarce  and  will  go  down  when  more  laborers  appear 
on  the  scene.  In  this  respect,  labor  does  not  differ 
from  wheat  or  steel  or  cotton.  If,  therefore,  we  are 
desirous  of  bettering  the  condition  of  the  workers  in 
poorly  paid  occupations,  we  must,  in  some  way, 
diminish  the  numbers  desiring  those  kinds  of  em- 
ployment. The  wages  will  then  take  care  of  them- 
selves. 

In  the  preceding  pages,  it  has  been  shown  that  the 
per  capita  income  of  the  American  people  has  been 
increasing  steadily  and  rapidly  during  the  period 
covered  by  our  study;  that  it  now  amounts  to  the 
comfortable  sum  of  $1,500  per  family  but  that  it  is 
very  unequally  distributed;  that  fairly  equal  distri- 
bution is  at  present  impracticable  because  the  lower 
classes  of  our  population  have,  as  yet,  failed  to  sub- 
stitute preventive  for  positive  checks  in  controlling 
the  population  supply  and  the  general  elevation  of 
the  standard  of  living  of  these  lower  classes  has  been 
prevented  by  the  rapid  multiplication  of  the  defective 
and  incompetent  and  the  still  more  rapid  influx  of  the 
ignorant  and  unprogressive  classes  of  Europeans; 
that,  as  a  result,  a  large  section  of  our  people  still 


252  WEALTH  AND  INCOME  OF 

remains  in  poverty;  that  the  members  of  the  unskilled 
wage-earning  class  have,  during  the  last  two  decades, 
been  compelled  to  satisfy  their  needs  with  a  lower 
rather  than  a  higher  real  wage;  and  that,  in  the 
meantime,  the  property  holding  classes  have  seen  their 
income  in  purchasing  power  continue  to  increase  at  a 
satisfactory  rate.  And  what  of  the  future?  Do  the 
coming  years  promise  more  and  more  bounteous 
returns  to  the  average  American?  Will  our  people 
continue  to  grow  more  and  more  rich  and  opulent,  or 
are  there  ominous  portents  of  economic  disaster 
ahead? 

The  decline  in  wages  measured  in  purchasing  power 
is  not  a  good  omen  and  the  same  may  be  said  of  the 
very  rapid  rise  in  the  relative  price  of  foodstuffs  so 
noticeable  in  recent  years.  The  importations  of 
corn  and  beef  from  Argentina  cause  us  to  wonder 
whether  the  United  States  can  longer  legitimately  be 
called  "the  larder  of  the  world." 

We  can  scarcely  view  with  absolute  complacency 
the  decline  in  our  exports  of  food  products.  Meat  fell 
off  from  $202,236,842  in  1906  to  $150,662,633  in 
1913.  Wheat  has  gone  down  from  $190,546,305  in 
1880  to  $89,036,428  in  1913.  Corn  exports  have 
decreased  from  $85,206,400  in  1900  to  $28,800,544  in 
1913.  These  facts  simply  indicate  that  the  time  is 
close  at  hand  when  the  United  States  will  be  importing 
rather  than  exporting  staple  foodstuffs.  And  whence 


THE  PEOPLE  OF  THE  UNITED  STATES       253 

can  we  hope  to  draw  food  supplies  for  any  long  period 
of  time?  Canada,  South  America,  and  Australia  are 
the  only  sources  of  moment  and  they  will  doubtless 
be  kept  busy  feeding  the  teeming  millions  of  Europe 
and  Asia. 

It  seems  very  doubtful  that  there  is  room  for 
another  great  nation  dependent  primarily  upon 
manufacturing  for  support.  Besides,  our  mineral 
resources  are  far  from  inexhaustible  and  it  is  certain 
to  become  more  and  more  difficult  to  extract  them 
from  the  earth.  Our  gas  wells  are  ceasing  to  flow  and, 
in  the  older  fields,  the  oil  wells  are  nearing  exhaustion. 

But  even  more  disturbing  to  our  equanimity  than 
the  failure  of  our  natural  resources  to  keep  pace  with 
our  growing  numbers  is,  perhaps,  the  rise  of  class 
antagonism,  and  the  growing  disrespect  of  a  con- 
siderable section  of  the  laboring  people  for  law  and 
order,  this  feeling  being  manifested  by  riotous  strikes, 
wholesale  murders,  dynamite  outrages  and  that  most 
contemptible  of  all  modes  of  attack,  sabotage. 

Under  these  circumstances,  is  there  any  possibility 
of  maintaining  our  present  standard  of  stability  and 
of  prosperity  for  any  great  length  of  time?  The 
answer  is,  that  it  is  possible,  but  only  upon  the 
condition  that  the  lesson  be  thoroughly  learned  that 
the  nation  which  wishes  to  progress  must  keep  its 
population  adjusted  to  its  resources  and  not  waste 
time  in  the  vain  attempt  to  make  resources  keep  pace 


254  WEALTH  AND  INCOME  OF 

with  a  population  increasing  by  leaps  and  bounds. 
The  latter  method,  which  still  seems  to  be  the  one 
commonly  thought  of  as  the  only  available  means  of 
staving  off  famine,  is  almost  as  primitive  as  kindling 
fire  by  rubbing  two  sticks  together  and  is  certainly 
unworthy  of  the  intellectual  development  and  the 
scientific  modes  of  thought  prevalent  in  the  twentieth 
century.  But  poverty  should  go!  The  coming 
hundred  years  should  see  it  practically  eradicated 
from  the  American  domain.  Whenever  we  eliminate 
the  section  of  our  population  remaining,  from  the 
reproductive  standpoint,  on  the  low  plane  of  their 
four-footed  ancestors,  there  seems  to  be  no  reason 
why  we  cannot  so  distribute  the  income  that  all  may 
secure  the  needed  comforts.  With  proper  educational 
and  eugenic  measures,  it  should  be  possible  to  cause 
this  section  of  our  people  to  be  a  negligible  factor  by 
the  year  2000  A.D.  But,  it  must  again  be  remem- 
bered that  we  cannot  afford  to  allow  our  prosperity 
to  wait  until  the  whole  world  has  advanced  to  a  high 
plane.  This  would  sacrifice  the  tremendous  advan- 
tage which  we  have  already  gained  and  would  post- 
pone all  real  economic  progress  to  some  remote  future 
date.  We  cannot  at  once  educate  and  reform  the 
benighted  of  all  nations  and  we  cannot  reasonably 
hope  to  make  any  progress  in  draining  the  swamp  of 
poverty  and  incompetence  in  our  own  land  if  we 
continue  to  pass  unnoticed  the  break  in  the  levee 


THE  PEOPLE  OF  THE  UNITED  STATES       255 

through  which  is  pouring  a  constant  river  of  illiterate 
and  submerged  humanity.1  True  we  have  done 
wonders  in  uplifting  the  immigrants  of  past  years  but 
the  soaring  prices  of  food  products,  the  falling  real 
wages,  the  growing  industrial  unrest,  all  tell  us  that 
we  are  tempting  fate  too  far. 

It  is  time  to  heed  the  warnings  and  take  proper 
measures  to  guard  the  citadel  of  American  prosperity 
against  the  subtle  assaults  of  the  low-standard  alien 
invaders.  With  American  problems  alone  to  solve, 
there  seems  to  be  no  apparent  reason  why  we  cannot 
so  adjust  our  population  to  our  resources  as  to  con- 
tinually increase  the  average  real  income  of  the  Ameri- 
can citizen  and  eventually  to  make  want  a  word 
unknown  in  the  land.  But,  if  we  attempt  to  uplift 
the  downtrodden  of  the  whole  earth  by  sharing  with 
them  the  food  and  raiment  belonging  to  our  children, 
we  can  look  for  nothing  better  than  the  gradual 
disappearance  of  our  widespread  comfort  and  a  slow 
re-entrance  into  those  sloughs  of  want  and  misery 
from  which  our  ancestors  escaped  with  such  great 
difficulty  and  from  which  it  may  again  require  many 
generations  of  patient  effort  to  emerge.  It  is  ours  to 
decide.  Which  path  will  we  choose? 

1  One  can  hardly  afford  to  miss  reading  in  this  connection  the 
masterly  address  by  President  Frank  A.  Fetter  to  the  American 
Economic  Association.  It  is  recorded  in  the  Supplement  of  the 
American  Economic  Review  for  March,  1913,  p.  5.  The  address 
is  entitled  Population  or  Prosperity. 


APPENDIX 

TABLE  VIA 


THE  ESTIMATED  VALUE  OF  BUSINESS  BUILDINGS  IN  THE 

UNITED  STATES. 

(In  Millions  of  Dollars.) 

Barns  and 

Office, 

Census 
Year. 

All  Classes 
of  Business 
Buildings.6 

Other  Out- 
buildings 
on  Farms.1 

Factory.1 

Mining.' 

Store,  and 
Miscella- 
neous.4 

1850 

1,113 

550 

100 

13 

450 

1860 

2,160 

1,097 

175 

38 

850 

1870 

2,975 

1,206 

288 

81 

1,400 

1880 

4,117 

1,591 

419 

107 

2,000 

1890 

5,700 

1,912 

878 

173 

2,737 

1900 

7,250 

2,134 

1,450 

326 

3,3406 

1910 

13,301 

3,795 

2,885 

496 

6,125 

1  Estimated  on  the  basis  that  sixty  per  cent  of  the  value  of  all 
farm  buildings  is  in  buildings  other  than  residences  and  that, 
before  1900,  the  buildings  formed  the  same  proportion  of  farm 
value  as  indicated  by  the  figures  for  1910  and  1900. 

2  Assumed  to  show  for  each  year  the  same  ratio  to  primary 
horse-power  as  shown  hi  1900. 

8  Assumed  to  bear  the  same  ratio  to  the  value  of  the  output 
as  shown  in  1900. 

4  Assumed  to  bear  the  same  ratio  to  the  total  national  income 
as  borne  in  1900. 

5  Error  for  1900  and  1910  probably  not  greater  than  15  per 
cent,  for  other  years  not  greater  than  25  per  cent. 

6  Half  the  value  of  "Other  Business  Property" — United  States 
Census  of  Wealth,  Debt,  and  Taxation,  1904,  P-  17. 

256 


THE  PEOPLE  OF  THE  UNITED  STATES   257 


TABLE  Vis 


THE  ESTIMATED  VALUE  OF  CAPITAL  USED  BY  RAILWAYS  AND 

OTHER  PUBLIC  UTILITIES  IN  THE  CONTINENTAL  UNITED 

STATES.1 

(In  Millions  of  Dollars.) 

Census 

Total.* 

Steam 
Rail- 

Street and 
Intel-urban 

Water, 
Light  and 

Telegraphs 
and 

Water 
Trans- 

Year. 

ways. 

Railways. 

Power. 

Telephones. 

portation. 

1850 

639 

459 

4 

83 

— 

93 

1860 

1,868 

1,542 

10 

157 

— 

159 

1870 

3,109 

2,669 

46 

235 

10 

149 

1880 

5,386 

4,706 

100 

382 

27 

171 

1890 

8,366 

7,052 

389 

580 

62 

283 

1900 

10,926 

7,680 

1,750 

950 

268 

278 

1910 

23,319 

13,600 

5,550 

2,239 

1,210 

720 

Estimated  from  numerous  Reports  and  Bulletins  of  the 
United  States  Census. 

2  Error  for  1900  and  1910  probably  not  greater  than  10  per 
cent,  for  preceding  years,  not  greater  than  15  per  cent  in  1890  or 
30  per  cent  in  1850. 


18 


258 


WEALTH  AND  INCOME  OF 


TABLE  Vic 


THE  ESTIMATED  VALUE  OF  THE  MOVABLE  MACHINERY  AND 
TOOLS  IN  USE  IN  THE  CONTINENTAL  UNITED  STATES. 
(In  Millions  of  Dollars.) 

CENSUS 
YEAE. 

INDUSTRY. 

All 
Industries.4 

Agri- 
culture.1 

Manu- 
facturing.2 

Mining.8 

Miscel- 
laneous.8 

1850 
1860 
1870 
1880 
1890 
1900 
1910 

399 
665 
1,206 
2,373 
2,665 
4,006 
5,995 

152 
246 
337 
406 
494 
750 
1,265 

129 
249 
544 
1,507 
1,584 
2,541 
3,795 

28 
50 
165 
260 
290 
315 
335 

90 
120 
160 
200 
300 
400 
600 

1  Reports  of  the  United  States  Census. 

2  Estimated  as  a  percentage  of  the  total  capital  invested. 
Curve  used  based  on  percentages  for  1890,  1900  and  1905  as 
shown  by  the  Census. 

8  Rough  estimate. 

4  Error  probably  not  greater  than  20  per  cent  hi  the  last  two 
decades,  increasing  perhaps  to  30  per  cent  hi  1850. 


TABLE  VIIlA 


THE   ESTIMATED   VALUE   OF   CONSUMPTION   GOODS   IN   THE 
CONTINENTAL  UNITED  STATES.S 
(In  Millions  of  Dollars.) 

Census 
Year. 

Total 

City 
Resi- 
dences.1 

Farm 
Resi- 
dences.3 

Churches, 
Theatres, 

etc.8 

Furni- 
ture, Car- 
riages , 
Automo- 
biles, etc.4 

Clothing, 
Personal 
Orna- 
ments, 
etc.4 

Miscel- 
laneous.4 

1850 
1860 
1870 
1880 
1890 
1900 
1910 

2,317 
4,197 
5,968 
9,645 
15,239 
20,824 
32,976 

1,271 
2,016 
3,029 
5,015 
7,794 
10,021 
17,546 

366 
731 
804 
1,060 
1,275 
1,423 
2,530 

150 
250 
375 
600 
970 
1,200 
2,200 

350 
800 
1,100 
1,900 
3,600 
4,880 
6,700 

135 
300 
500 
800 
1,200 
2,000 
3,000 

45 
100 
160 
270 
400 
1,300 
1,000 

1  Estimated  on  the  basis  of  the  Census  figures  for  1900,  as- 
suming residence  value  to  form  a  constant  ratio  to  the  per  capita 
income  of  the  United  States  times  the  urban  population. 

2  Estimated  at  40  per  cent  of  the  value  of  all  farm  buildings. 

3  Rough  estimate. 

4  Estimated   as   an   approximately   constant   share   of  total 
wealth. 

6  The  estimates  in  this  table  for  years  preceding  1890  are  little 
more  than  guesses  and  are  submitted  only  because  no  material 
for  more  accurate  computations  seems  to  be  available.  The 
figures  for  1900  are  probably  within  20  per  cent  of  the  correct 
results  and  those  for  1890  and  1910  probably  do  not  err  by  more 
than  30  per  cent. 


260 


WEALTH  AND  INCOME  OF 


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THE  PEOPLE  OF  THE  UNITED  STATES   261 


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THE  PEOPLE  OF  THE  UNITED  STATES   263 


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264 


WEALTH  AND  INCOME  OF 


TABLE  XXXIlA 


ESTIMATED  DISTRIBUTION  OF  PERSONS  GAINFULLY  EMPLOYED 

IN  THE  CONTINENTAL  UNITED  STATES.1 

CEHSUS 

TOTAL 
NUMBER  IN 

NUMBER  OP 
ENTREPRE- 

NUMBER OF  EMPLOYEES  IN 
THOUSANDS. 

YEAH. 

THOU- 
SANDS. 

NEURS  IN 
THOUSANDS. 

All  Em- 
ployees. 

Salaried 
Persons. 

Wage 
Workers. 

1850 

6,080 

2,200 

3,880 

300 

3,580 

1860 

8,240 

3,150 

5,090 

520 

4,570 

1870 

12,510 

4,270 

8,240 

810 

7,430 

1880 

17,390 

5,600 

11,790 

1,260 

10,530 

1890 

23,320 

7,100 

16,220 

1,850 

14,370 

1900 

29,070 

8,720 

20,350 

3,190 

17,160 

1910 

37,5502 

9,350 

28,200 

5,950 

22,250 

1  Estimated  principally  from  the  Census  of  1900,  Occupations, 
Chap.  2. 

2  Thirteenth  Census  of  the  United  States,  Volume  4,  Table  I. 
Recorded  numbers  reduced  by  617,000  on  account  of  probable 
errors  mentioned  on  pages  28  and  29  of  this  Census  volume. 


THE  PEOPLE  OF  THE  UNITED  STATES       265 
TABLE  XXXVlA 


INDICES  OF  THE  PRICE  OF  LABOR  PER  HOUR  FOR  FEMALE 

WAGE  EARNERS  IN  IMPORTANT  MANUFACTURING 

INDUSTRIES.1 

Weight 

21 

9 

2 

3 

5 

2 

Industry. 

All  In- 
dustries. 

Cotton. 

Woolen. 

Silk. 

Knit 
Goods. 

Boots 
and 
Shoes. 

Year. 

1890 

100.0 

99.4 

98.6 

96.4 

104.9 

97.6 

1891 

99.5 

98.9 

98.3 

94.5 

106.2 

94.5 

1892 

99.6 

98.2 

99.7 

100.5 

102.0 

98.3 

1893 

102.1 

104.1 

104.5 

103.1 

97.4 

101.3 

1894 

98.9 

99.0 

95.5 

103.7 

95.6 

102.6 

1895 

99.7 

98.7 

96.1 

101.7 

100.6 

102.0 

1896 

103.0 

105.2 

100.0 

103.2 

100.4 

102.3 

1897 

100.2 

102.0 

100.6 

98.2 

97.6 

101.9 

1898 

98.9 

98.1 

104.1 

100.0 

97.3 

99.6 

1899 

97.4 

96.6 

103.6 

98.6 

94.6 

99.6 

1900 

104.3 

109.4 

110.4 

99.4 

96.2 

102.8 

1901 

106.3 

110.4 

111.5 

100.5 

101.3 

104.3 

1902 

111.3 

113.9 

114.3 

102.4 

113.7 

104.2 

1903 

115.0 

117.6 

116.7 

108.4 

115.7 

110.0 

1904 

114.3 

117.5 

117.0 

107.2 

113.6 

109.5 

1905 

117.6 

120.7 

118.6 

107.7 

118.9 

113.8 

1906 

125.4 

131.5 

125.5 

110.1 

126.3 

118.4 

1907 

136.7 

148.7 

135.2 

119.6 

131.9 

121.7 

1908 

135.2 

147.5 

126.5 

114.8 

134.3 

121.3 

1909 

133.5 

142.4 

1269 

115.8 

135.6 

125.2 

1910 

137.5 

148.5 

132.1 

120.3 

135.0 

125.3 

1911 

137.7 

148.4 

131.6 

122.0 

135.1 

125.9 

1912 

147.8 

164.2 

148.3 

124.0 

140.3 

128.0 

Av.  money 

wage   per 

hour, 

1890-1899 

$0.1061 

$0.0881 

$0.1202 

$0.1232 

$0.1029 

$0.1551 

Av.  money 

wage  per 

hour,  1912 

0.1541 

.1446 

.1783 

.1528 

.1444 

.1985 

1  All  figures  computed  from  Bulletins  128  and  134  °f 
United  States  Bureau  of  Labor  Statistics. 


266 


WEALTH  AND  INCOME  OF 
TABLE  XXXVIlA 


INDICES1  OF  THE  PRICE  OF  LABOR  PER  HOUR  FOR  MALE  WAGE 
EARNERS  IN  MANUFACTURING  INDUSTRIES^ 

Weight* 

62 

4 

l 

1 

l 

8 

Industry. 

All  In- 
dustries. 

Cotton.* 

Woolen.* 

Silk.* 

Knit 
Goods.6 

Boots  and 
Shoes.6 

Year. 
1890 
1891 
1892 
1893 
1894 

102.1 
101.7 
101.5 

102.0 
97.2 

108.9 
102.1 
100.5 
105.6 
97.5 

99.8 
100.9 
101.8 
106.0 
95.4 

98.5 
96.7 
97.4 
96.2 
99.9 

107.8 
109.1 
94.8 
109.1 
100.2 

98.7 
98.3 
99.6 
100.4 
99.0 

1895 
1896 
1897 
1898 
1899 

97.7 
98.7 
98.2 
98.9 
101.9 

96.1 
102.4 
97.6 
94.7 
94.8 

95.6 
97.6 
99.1 
101.3 
102.2 

101.4 
103.3 
104.0 
100.7 
101.4 

110.0 
95.7 
91.4 
93.4 

88.7 

101.2 
100.0 
100.4 
100.7 
102.4 

1900 
1901 
1902 
1903 
1904 

105.6 
108.3 
113.1 
117.6 
116.6 

106.0 
106.2 
112.3 
118.9 
115.3 

111.2 
111.5 
115.5 
118.6 
114.3 

102.3 
102.4 
101.8 
102.2 
104.2 

92.8 
104.2 
102.2 
123.9 
118.9 

104.4 
104.1 
109.0 
114.1 
118.9 

1905 
1906 
1907 
1908 
1909 

119.3 
125.6 
131.3 
127.8 
128.8 

118.3 
131.3 
148.6 
146.4 
141.1 

118.9 
127.7 
133.5 
129.7 
131.9 

105.4 
107.2 
107.7 
110.7 
111.3 

123.3 
128.9 
138.2 
131.8 
129.4 

121.5 
122.7 
129.7 
126.6 
131.8 

1910 
1911 
1912 

135.1 
136.5 
140.3 

143.8 
147.4 
162.3 

133.0 
135.1 
149.1 

112.2 
113.0 
117.8 

137.2 
138.1 
154.8 

130.8 
133.2 
134.1 

Av.  money 
price  per 
hour, 
1890-1899 
Av.  1912 

$0.1959 
.2749 

$0.1063 
.1725 

$0.1562 
.2330 

$0.1806 
.2128 

$0.1388 
.2148 

$0.2451 
.3288 

THE  PEOPLE  OF  THE  UNITED  STATES   267 

1  Base  1890-1899. 

*  Computed  from  the  reports  of  the  United  States  Bureau  of 
Labor.  Occupations  and  industries  weighted  according  to  the 
approximate  number  of  males  employed  in  1910. 

8  Weighted  approximately  according  to  the  number  of  males 
employed  in  1900,  according  to  the  Census  of  Occupations. 

4  Bulletin  128,  United  States  Department  of  Labor. 

1  Bulletin  134,  United  States  Department  of  Labor. 


268 


WEALTH  AND  INCOME  OF 


TABLE  XXXVIlA  (CONT'D) 


INDICES  OF  THE  PRICE  OF  LABOR  PER  HOUR  FOR  MALE  WAGE 
EARNERS  IN  MANUFACTURING  INDUSTRIES. 

Weight 

14 

11 

2 

2 

7 

6 

Industry. 

Hand 
Trades.8 

Lumber.7 

Mill- 
work.7 

Furni- 
ture.7 

Railroad 
Cars.s 

Iron  and 
Steel.  » 

Year. 

1890 

99.1 

101.9 

99.2 

100.5 

101.6 

109.0 

1891 

99.6 

101.4 

100.4 

101.5 

101.4 

109.0 

1892 

100.9 

101.5 

100.1 

102.5 

101.7 

106.0 

1893 

100.5 

99.9 

100.0 

101.1 

107.0 

102.0 

1894 

98.2 

96.7 

97.0 

99.4 

97.5 

93.0 

1895 

98.4 

97.0 

98.1 

97.9 

97.3 

95.0 

1896 

99.5 

97.4 

99.3 

97.7 

98.0 

97.0 

1897 

100.0 

97.7 

100.0 

100.2 

98.4 

93.0 

1898 

100.7 

101.5 

101.7 

98.0 

97.8 

93.0 

1899 

103.1 

104.5 

104.1 

102.0 

99.5 

103.0 

1900 

107.1 

105.4 

105.9 

102.4 

100.6 

111.0 

1901 

111.1 

108.6 

108.6 

107.3 

101.7 

114.0 

1902 

116.5 

112.1 

112.5 

114.1 

105.4 

122.0 

1903 

121.8 

114.2 

116.5 

115.2 

108.9 

128.0 

1904 

123.0 

112.3 

115.7 

117.5 

112.2 

117.0 

1905 

124.9 

116.3 

116.7 

121.0 

112.7 

121.0 

1906 

131.2 

124.4 

120.6 

125.7 

115.3 

128.0 

1907 

136.6 

129.6 

124.5 

127.3 

119.4 

131.0 

1908 

138.7 

118.7 

123.4 

127.5 

118.5 

121.  810 

1909 

141.3 

121.6 

124.9 

126.7 

115.9 

122.510 

1910 

146.3 

130.0 

127.8 

130.5 

126.2 

133.010 

1911 

149.1 

129.9 

129.0 

132.1 

127.9 

133.510 

1912 

151.8 

131.5 

132.3 

135.1 

129.0 

135.210 

Av.  money 

price  per 

hour, 

1890-1899 

$0.2794 

$0.1384 

$0.1928 

$0.1674 

$0.2037 

$0.1623 

Av.  1912 

.4242 

.1820 

.2551 

.2261 

.2627 

.2195 

THE  PEOPLE  OF  THE  UNITED  STATES   269 

'  Bulletin  131  of  the  United  States  Bureau  of  Labor. 

7  Bulletin  129  of  the  United  States  Bureau  of  Labor. 

8  Bulletin  137  of  the  United  States  Bureau  of  Labor. 

9  Wesley  Mitchell.    Business  Cycles,  p.  133. 

10  Bulletin  151  of  the  United  States  Bureau  of  Labor. 


INDEX 


Ability,    relation    to    wealth, 

60-62 

Active  capital,  42-46 
Agriculture, 

product,     138-141,     147, 

151-153 

productiveness,  24-26 
total  paid  in 
interest,  261 
profits,  263 
rent,  262 
wages,  260 
value  of  machinery  used 

in,  258 
wages  in,   195-197,  203- 

204 

Agricultural  land,  22-27 
Animals  on  farms,  28-31 

Birth  rate, 

control  of,  247 
high  among 

ignorant  peoples,  242- 

247 

immigrants,  185 
Book  income  defined,  107-113 
Buildings, 

business,  256 
residence,  259 
Business, 

relation  to  land,  21 

Capital, 

active,  42-46 

amount  used  hi  transpor- 
tation, 257 

share  in  national  income, 
157-162 

social,  10,  41-42 

supply  of,  41-46 


Capital,  supply  of, 

relation  to  productiv- 
ity, 145-151 

Carver,     Thomas    W.,     How 
Ought    Wealth    to    be    Dis- 
tributed? 243 
Cattle  supply,  28-30 
Chapin,  Robt.  Coit,  221 
City  population.  19-21 
Classes  of  population, 

according  to  wealth,  78- 

85,  93-98 
advantages  of  property  to, 

100-101 
changes  hi  wealth  of,  84- 

86 

percentages  of  wealth 
owned  by,  79-83,  93- 
98 

wealth  of  in  different 
countries,  98-99,  103- 
105 

Coal  supply,  33-35 
Commerce, 

product,  value  of,  138-141 
total  paid  in 
interest,  261 
profits,  263 
rent,  262 
wages,  260 
value  of  buildings  used  in, 

256 
Commodity-prices,    189,    192, 

198 

Concentration  of  wealth, 
advantages,  60-64 
in  different  nations,   96- 

103 

relation  to  maximum  pro- 
ductivity, 62-63,  67-69 


271 


272 


INDEX 


Consumers'   index   of   prices, 
180,  189 

Consumption  goods, 
denned,  10-12 
value  in  U.  S.,  46-49,  259 

Copper  supply,  36-37 

Corporate  wealth,  7 

Corporation, 

advantages  of,  211-212 
evils  of,  213-214 
future  of,  214-216 
problems  of,  214-216 
resemblance  to  state,  214- 
216 

Corporations, 

and  concentration  of  in- 
come, 218-219 
dividends  of,  209-211 
interest  paid  by,  209-211 
share  in  national  income, 
208-216 

Crops, 

yield  per  acre,  25-26 

Diminishing  returns,   law  of, 

176-178 
Distribution  of  estates, 

changes  in,  73-74,  83-86 
in  France,  86-88,  93-99 
in  Massachusetts,  65-87, 

90-95 
in  United  Kingdom,  87- 

90,  93-105 
in  Wisconsin,  72-87,  90- 

105 
Distribution  of  income, 

among  families  of  U.  S., 

217-238 

changes  in,  231-232 
Streightoff  on,  219 
among  f  amilies  of  Wiscon- 
sin, 

Trumbower  on,  219 
among  wage-earners,  221- 

222 

compared    with     wealth, 
227 


Distribution  of  income, 

in  different  nations,  227- 

238 
similarity   in   U.    S.    and 

Prussia,  232-238 
what  is  best?  243,  248-251 
Distribution    of    national    in- 
come to 
factors     of     production, 

154  f. 

industries,  136-153 
Distribution  of  wealth, 

among  families,  Ch.  IV. 
comparison    of    different 

countries,  90-105 
desirability  of  change  in, 

101-103 
effect  of  primogeniture  on, 

94-95 
existing,  64-105 

effectiveness  as  stim- 
ulant to  industry, 
82-83 
ideals  concerning,   50-64, 

101 
hi  Massachusetts,  65-87, 

90-95 

in  Prussia,  89-99 
"natural,"  92 
result  of  legislation,  92-95, 

102-103 

under  despotism,  51-54 
wide, 

advantages,  54-60 
disadvantages,  60-64 
Dividends   paid   by   corpora- 
tions, 209-211 

Earnings  of  men,  198-204 

supplemented  by  family, 

295 

Economic  goods,  8,  11-12 
value  of  in  U.  S.,  13 
measure  of,  14 
Education, 

increases  real  income,  205- 
206 


INDEX 


Ely,  Richard  T., 

assistance  to  author,  vii 
dedication  to,  vi 
observations  in  New  Zea- 
land, 101 

Property  and  Contract,  103 
Employees, 

number  in  U.  S.,  264 
share  in  national  income, 

157  f. 
Entrepreneurs, 

number  in  U.  S.,  264 
share  in  national  income, 

157-162 
Estates, 

distribution  in, 

France,  86-88,  93-99 
Massachusetts,      65- 

87,  90-95 
United     Kingdom, 

87-90,    93-105 
Wisconsin,  72-87,  90- 

105 
relation  to  average  wealth, 

67-69 
Eugenie   measures,    need   for, 

249,  251,  254 

Exports  of  foodstuffs,  decline 
in,  252 

Factors  of  production, 
denned,  154-156 
harmony  and  conflict  in 

interests,  154 
shares  of  national  income, 

154  f. 
Family  income, 

in  Prussia,  227-238 
in  U.  S.,  217-238 
Families  of  U.  S. 

classified  according  to  in- 
come, 223-238 
Farms, 

value  of, 

buildings  on,  256 
residences  on,  259 
Fisheries,  product  of,  138-141 


Food  exports  from  U.  S,  de- 
clining, 252 

Forests  of  U.  S.,  31-33 
Free  land,  26 

effect  on  wages,  163,  184- 

185 
Free  goods,  8-12 

decrease    in    importance, 

133 

income  from,  107 
France, 

distribution  of  estates  in, 
86-88,  93-99,  227,  238 

Gas,    supply    of    natural    hi 

U.  S.,  39 
Goods,  defined, 

consumption,   46-49 
economic,  8 
free,  8-9 
Government  in  U.  S., 

share    of    in    production, 

138-143,  151 

Grazing  land,  supply  in  U.S., 
28-31 

Immigration, 

and  minimum  wage,  185 
effect  on, 

American  labor,   181 
birth  rate,  185 
foreign         countries, 

187-188 

wage-rate  in  U.  S., 
174-187,  206-207, 
251-252 

evil   social   and   political 
effects,     185,     251-252 
recent,  181 
Income, 

inventions   increase   real, 

205-206 
Income,  average, 

different     nations     com- 
pared, 227-247 
Prussia  and  U.   S.,  236- 
238 


274 


INDEX 


Income,  average, 

relation     to     population 

density,  238-255 
Income,  definitions, 
book,  107-113 
compared  to  wealth,  106 
in  purchasing  power,  112- 

114 

money,  107-113 
psychic  or  real,  114-118 
Income,    distribution    of,    51 
in  Prussia,  227-238 
in  Wisconsin,  219-220 
paternalistic,  51-53 
to    families,  not  individ- 
uals, 222 

Income,  money,  for  U.  S., 
average,  236-238,  248-251 
changes  in  concentration, 

217-219 

distribution  among  fami- 
lies, 217-238 
Spahr's  estimate,  226- 

227,  230-231 
distribution  among  wage- 
earners,  221-222 
net     corporate,     209-211 
total,  119  f. 
Individual  wealth,  6 
Industrial  shares  of  national 

income,  136-153 
Inheritance  tax, 

might  be  used  to  equalize 

wealth,  102 
Interest, 

defined,  154-155 
estimate  for  TJ.  S.,  156- 

161 
paid  by  corporations,  209- 

211 
share  in  national  income, 

157-162 

totals,  by  industries,  261 
Iron  ore  in  U.  S.,  35-36 

Labor,  possible  reward  for, 

165-167 
19 


Labor, 

share  in  national  income, 

157-161,  163  f. 
Land, 

share  in  national  income, 

155-162 
Land,  supply  in  the   United 

States,  15-41 
agricultural,  22-27 
business,  20-21 
farm,  23,  26-27 
free,  26 
grazing,  28-31 
residential,  16-21 
urban,  15-21 
Land  value, 

relation   to   national   in- 
come, 131-132 
relation  to  prosperity,  21- 

22 
Legislation, 

effect   on   wealth   distri- 
bution, 102-103 
Living-wage,  249-251 
Lorenz  curves, 

incomes    in    different  na- 
tions, 227,  230 
wealth  of, 

different   nations, 

93-94,   227 
Mass,    and    Wis.. 
71-87 

Machinery  and  tools, 

value  in  U.  S.,  258 
Malthus,  Thomas  R., 

laws  of  population,  242- 

247 
Manufacturing     industry     in 

U.S., 
corporations'     share    in, 

208 

total  paid  hi 
interest,  261 
profits,  263 
rent,  262 
wages,  260 


INDEX 


275 


Manufacturing    industry     in 

U.S., 
value  of 

buildings  used  in,  256 
machinery    used    in, 

258 
total    product,    138- 

141,  144-151 
wage-rate  in, 

for    men,     195-197, 

201-204,  266-269 
for  women,  265 
Margin  of  cultivation,  23 
Massachusetts, 

distribution  of  estates  in, 

65-87,  90-95 
Metal  supply  in  U.  S.,  31,  35- 

37 

Mill,  John  Stuart,  10 
Minimum  wage, 

immigration    makes    im- 
possible, 185 
Mineral  resources  of  U.  S.,  33- 

40 
Mining  industry  in  U.  S., 

corporations'  share  in,  208 
total  paid  in 
interest,  261 
profits,  263 
rent,  262 
wages,  260 
value  of 

buildings  used  in,  256 
machinery    used    in, 

258 

productj  138-151 
wage-rate     in,     195-197, 

203-204 
Money  income, 

defined,  107-113 
for  Prussia,  227-238 
for  U.S.,  119  f.  217-251 
More,  Louise  Boland,  221 

National  dividend  for  U.  S., 
defined,  119-124 
estimate  of  total,  132-136 


National  dividend  for  U.  S., 
methods  of  measurement, 

125-128 

per  capita,  132, 134-136 
National   money    income    for 

U.S., 
corporate  share  hi,  208- 

209 

defined,  120-124 
distribution  among  factors 

of  production,  154  f. 
industrial  shares  of,  136- 

153 
methods    of    measuring, 

125-130 

per  capita,  128-130 
total,  128-131 
Natural  resources,  10-12 
productive,  10,  15-41 

Opportunity  for  accumulating 
wealth,  82-83 

Percentages  of  wealth, 

owned  by  different  classes 
of    population,    79-83, 
93-98 
Petroleum  supply  hi  U.  S.,  37- 

39 

Phosphate  rock  in  U.  S.,  37 
Population,  laws  of,  242-255 
Population  of  U.  S. 

classified    as    to    wealth, 

78-85,  93-98 
rural  and  urban,  16-27 
Population  density, 

most  desirable,  238-240 
relation    to    average    in- 
come, 238-255 
relation  to  war,  240 
Positive  and  preventive  checks, 

242-245,  247,  251 
Poverty,  elimination  of,  254- 

255 
Price  index  for  consumption 

goods,  189 
Price  level,  179-180 


276 


INDEX 


Primogeniture, 

effect    on    wealth    distri- 
bution, 94-95 
Private  wealth,  6-7 
Profits, 

defined,  154-156 
Profits,  money,  for  U.  S., 
average,  168-172,  177 
compared  with  wages,  165, 

172 

fluctuations  in,  171,  177 
share  in  national  income, 

157-162 
totals,  estimated,  156-161 

by  industries,  263 
Production, 

corporate  share  in,  208- 

209 
Productive   natural   resources 

of  U.  S.,  10,  15-41 
Productivity  of  industry, 

relation  to  wealth  concen- 
tration, 62-63,  67-69 
Prosperity, 

relation  to  population  den- 
sity, 238-255 
Protection  of  laborer  against 

foreigner,  207 
Prussia, 

income     distribution     in, 

227-238 
wealth     distribution     in, 

89-99 
Psychic  income,  defined,  114- 

118 

Public  wealth,  7 
Purchasing  power  income, 
defined,  112-114 
of  people  of  U.  S.,  129- 
132 

Railways  of  U.  S., 
total  paid  in 
interest,  261 
profits,  263 
rent,  262 
wages,  260 


Railways  of  U.  S., 

wage    rate    on,    195-197, 

203-204 
Real  income, 

defined,  114-118 
increased     by     improve- 
ments, 205-206 
Rent, 

and  single  tax,  160-162 
defined,  154-155 
estimate  for  TJ.  S.,  156- 

162 

by  industries,  262 
Residences  in  U.  S.,  value  of, 

259 

Residential  land  in  U.  S.,  16-21 
Rural    population    of    U.    S., 
16-27 

Sabotage  in  U.  S.,  result  of 

immigration,  253 
Salaried  persons, 

definition,  191 

number  in  U.  S.,  264 
Salaries  and  wages  in  U.  S., 

totals  by  industries,  260 
Savings, 

of  capital  in  U.  S.,  132 

relation    to    national    in- 
come, 123,  128 
Sheep  supply,  28-30 
Single  tax,  possibility,  160-162 
Social  capital, 

defined,  10 

supply  in  U.  S.,  41-42 
Social  wealth,  8-49 

classes  of,  10-12 

measured  in  utility,  8,  14 
Spahr,  Charles,  B.,  x,  2 

estimates    of    income    in 

U.  S.,  130,  226,  230-231 

Standard  of  comfort,  defined, 

242-243 
Streightoff,  Frank  H., 

Distribution  of  Incomes  in 

U.  S.,  219,  237-238 
Subsistence  level,  242,  245 


INDEX 


277 


Timber  supply  in  U.  S.,  31-33 
Transportation,  in  U.  S., 
capital  used  in,  257 
corporate  share  in,  208 
value  total  product,  138- 

141,  145-151 
wage-rate  in,  178-179 
Trumbower,  Henry  M.,  Wis- 
consin incomes,  219,  224 

United  Kingdom, 

distribution  of  estates  in, 

87-90,  93-105,  227-238 

Urban  land  supply  in  U.  S., 

15-21 
Urban    population  of   U.  S., 

16-21 
Utility, 

definition,  8 

measure  of  social  wealth, 
8,  14 

Value, 

definition,  8 

relation  to  scarcity,  21-22 
Village  population  of  U.  S., 
18-19 

Wage  rate, 

causes  for  low,  249-255 
depends   on  productivity 

of  labor,  188-189 
how  determined,  164-165, 

183 
lag  behind  price-level,  182- 

183 

living,  249-251 
protection  of,  207 
relation    to    income     of 

laborers,  164-165,  172- 

173 
Wage-rate  in  U.  S., 

average,   156-161,   168  f, 

189-199 
compared     with     profits, 

165-172 
daily,  198-199 


Wage-rate  in  U.  S., 

free   land   sustains,    163, 

184-185 

hourly,  189-199 
immigration  lowers,  174- 

187,  206-207,  251,  252 
index  of,  189-199 

different   industries, 

193-197 
industries,  193-197 

manufacturing,     178, 
193-197,   265-269 
railways,  178-179 
relative   fluctuations, 

193-197 

lag  behind  prices,  182-183 
men,  190-200,  266-269 
rise  long-continued,  168- 

175 

weekly,  199-200,  209-210 
women,  194,  265 
Wage  workers,  number  in  U. 

S.,  264 

Wages  and  salaries  in  U.  S., 
share  in  national  income, 

157-161,  163  f. 
totals  by  industries,  260 
Wages,  defined,  154-155 
War,  result  of  overpopulation, 

240 
Wealth, 

average,  50,  67 

changes  for  each  class, 

84-86 

each  class,  different 
countries,  98-99, 
103-105 

economic  in  U  S.,  13 
existing  concentration,  52- 

53 

relation  to  income,  51, 106 
social,  8-49 
definitions, 

corporate,  7 
individual,  6-7 
private,  6-7 
public,  7 


278 


INDEX 


Wealth,  definitions, 

social,  8-10 
Wealth  ownership, 

advantages  of,  100-102 
equal  vs.  unequal  dis- 
tribution, 54-64 
gives   freedom  of  action, 

55-56 

gives  power,  53-54 
makes  for  social  stability, 

56-57 

safeguard  against  distress, 
54-55 


Wealth  ownership, 

stimulus  to  effort,  57-59 
symbol  of  only  one  type 

of  ability,  60-62 
Wisconsin, 

distribution  of  estates  in, 

72-87,90-105 
income     distribution    in, 

219-220,  227-238 
Women's  wages  in  manufac- 
turing, 265 

Working-classes,  condition  in 
U.  S.  and  Europe,  205 


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AN  IMPORTANT  NEW  BOOK 

INCOME 

An  Examination  of  the  Returns  for  Services  Rendered  and  from 
Property  Owned  in  the  United  States 

B?  SCOTT  NEARING,  PH.D. 

Wharton  School,  University  of  Pennsylvania 

Cloth,  izmo,  $1.23 

In  his  preface  the  author  says: — "Modern  economic  discussions  are 
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"Service  is  of  preeminent  importance.  In  the  home,  in  the  street,  in 
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The  Meaning  of  Income — The  Whence  and  Why  of  Income — Service 
Income  and  Property  Income — The  Occupations  of  those  rendering  Ser- 
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Outlines  of  Economics 

BY  RICHARD  T.  ELY,  PH.D.,  LL.D. 

Professor  of  Political  Economy  in  the  University  of  Wisconsin.  Revised  and 
enlarged  by  the  Author  and  Thomas  S.  Adams,  Ph.D.,  Professor  of  Political 
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The  new  edition  of  Professor  Richard  T.  Ely's  "Outlines  of  Eco- 
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Young  of  Stanford  University.  All  of  these  men  are  experts  in  vari- 
ous departments  of  economics.  Professor  Young  is  an  expert  on 
statistics  and  a  mathematician,  and  has  given  especial  attention  to 
banking  and  insurance.  Professor  Adams  has  been  employed  as  an 
expert  in  United  States  census  work  and  also  as  an  expert  in  taxa- 
tion by  the  Wisconsin  Taxation  Commission.  Professor  Lorenz  is 
Deputy  Labor  Commissioner  of  the  State  of  Wisconsin,  and  a  spe- 
cialist in  labor  problems. 

In  its  present  form,  Ely's  "  Outlines  of  Economics  "  is,  perhaps, 
the  most  comprehensive  discussion  of  the  whole  subject  of  economics 
yet  produced  in  America.  It  has  often  been  remarked  of  the  earlier 
book  that  it  is  one  of  the  most  interesting  of  all  economic  treatises. 
The  new  edition,  with  its  fuller  discussion  of  many  subjects,  is  even 
more  readable.  The  special  treatment  of  practical  problems  in  eco- 
nomics is  fuller  than  in  any  other  text-book  in  English,  and  such 
subjects  as  the  railway  problem,  forestry,  labor  problems,  and  social- 
ism are  dealt  with  fully.  The  book  is  also  unique  in  the  extent  to 
which  principle  is  illustrated  with  concrete  applications.  In  this 
particular  the  book  may  not  inaptly  be  compared  to  Adam  Smith's 
"Wealth  of  Nations." 

In  view  of  Professor  Ely's  great  authority  as  an  economist,  the 
expert  assistance  which  he  has  been  able  to  command  and  the  unique 
plan  of  his  book,  it  is  safe  to  say  that  this  will  be  accepted  as  one  of 
the  most  important  American  contributions  to  the  science  of  eco- 
nomics. As  such,  it  will  receive  attention  not  only  as  a  text-book, 
but  as  a  work  for  the  general  reader  who  wishes  to  familiarize  him- 
self with  the  whole  field  of  economic  thought. 


SOCIAL  SCIENCE  TEXT-BOOKS 
EDITED  BY  RICHARD  T.  EIY 

History  of  Economic  Thought 

A  Critical  Account  of  the  Origin  and  Devel- 
opment of  the  Economic  Theories  of  the 
Leading  Thinkers  and  the  Leading  Nations 

By  LEWIS  H.  HANEY 

Cloth,  xvii  +  567  pp.,  8vo,  $2.00 

"Dr.  Haney's  work  is  both  complete  and  exhaustive 
without  being  discursive.  We  shall  look  far  before  finding 
anything  of  its  kind  so  satisfying."  —  The  Argonaut. 

"This  valuable  precis  of  the  world's  economic  wisdom 
serves  not  only  as  a  trustworthy  text-book,  but  also  as  an 
authoritative  denotement  of  old  economic  landmarks.  In 
the  light  it  casts  on  bygone  commercial  and  political 
conditions,  the  rapid  progress  and  impulsive  changes  in 
present-day  methods  of  trade  and  legislation  become 
clearly  outlined  and  intelligible."  —  American,  Philadelphia. 

"The  present  volume  is  of  suitable  compass,  and  the 
treatment  is  such  as  to  make  it  satisfactory  as  a  text-book." 
—  The  Nation. 

"The  book  should  be  of  value  to  English  readers  and 
students  of  economics,  for  unlike  French  and  German  eco- 
nomic writers,  who  have  produced  several  histories  of 
economic  thought,  only  one  has  been  written  previously  in 
English,  and  that  is  now  out  of  date.  Dr.  Haney  has 
made  a  distinct  contribution  to  economic  literature  and 
one  reflecting  credit  on  American  scholarship."  —  The 
Boston  Transcript. 


SOCIAL  SCIENCE  TEXT-BOOKS 

EDITED  BY  RICHARD  T.  ELY 

Problems  of  Child  Welfare 

BY  GEORGE  B.  MANGOLD,  PH.D. 

Director  of  the  School  of  Social  Economy  of  Washington  University 
Cloth,  Svo,  522  pages,  $2.00 

Presents  the  principles  of  child  welfare  work  in  a  systematic 
way.  With  this  end  in  view  the  author  has  grouped  his  sub- 
ject matter  under  the  following  headings :  The  Conservation  of 
Life;  Care  of  Health  and  Physique;  Educational  Problems; 
Child  Labor ;  Juvenile  Delinquency ;  and  the  Dependent  Child. 
Much  of  the  constructive  philanthropy  of  to-day  must  deal  di- 
rectly with  the  child,  the  improvement  of  his  conditions  being 
the  direct  objective.  Those  problems  which  affect  children  in 
an  indirect  way,  whether  in  the  field  of  remedial  or  preventive 
philanthropy,  are  not  treated.  The  questions  of  child  welfare, 
however,  are  correlated.  Under  each  separate  problem  are  dis- 
cussed the  causes  and  conditions  thereof,  the  machinery  of  so- 
cial betterment,  and  the  plans  and  program  of  improvement. 

Although  the  book  is  designed  especially  for  use  as  a  text  in 
college  courses  on  constructive  and  preventive  philanthropy,  it 
will  also  appeal  to  that  growing  class  of  men  and  women  who 
in  a  systematic  way  are  endeavoring  to  acquaint  themselves 
with  the  various  aspects  of  practical  sociology. 


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Publishers  64-66  Fifth  Avenue  New  Tork 


AN  IMPORTANT  NEW  WORK 

The  Progressive  Movement 

BY  BENJAMIN  P.  DEWITT,  M.A.,  LL.B. 

Cloth,  I2mo,  $1.50 
CITIZENS'  LIBRARY.  NEW  SERIES 

This  book  meets  the  needs  of  the  general  reader  who 
desires  a  broad,  comprehensive  and  non-partisan  discussion 
of  the  fundamental  principles  underlying  the  Progressive 
Movement.  The  causes  of  the  growth  of  the  movement 
are  first  considered,  and  its  origin  and  development  in  each 
of  the  political  parties  carefully  traced.  Important  reform 
measures  connected  with  it  in  nation,  state,  and  city,  such 
as  control  of  corporations,  direct  legislation,  mothers'  pen- 
sions, minimum  wage,  commission  government,  the  city 
manager  plan,  etc.,  are  explained  in  their  relations  to  pro- 
gressivism  as  a  whole. 

"The  work  is  well-balanced  and  is  to  be  commended 
for  its  breadth  of  view." — Philadelphia  Public  Ledger. 

"A  compact  and  comprehensive  discussion  of  current 
tendencies  in  American  Politics." — Washington  Star. 


THE  MACMILLAN  COMPANY 

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CITIZENS'  LIBRARY 

OF 

Economics,  Politics  and  Sociology 
EDITED  BY  RICHARD  T.  ELY,  PH.D.,  LL.D. 

Of  the  University  of  Wisconsin 
Each  volume  I2tno,  half  leather,  $1.25  unless  otherwise  specified. 

"This  has  already  proven  itself  one  of  the  most  fruitful  among 
the  different  'libraries'  of  the  sort,  in  yielding  stimulating 
books  upon  the  modern  phases  of  economic  and  social  science." 
— Philadelphia  Public  Ledger. 

American  City,  The.    A  Problem  in  Democracy.    By  D.  F.  Wilcox. 
Child  Problems.    By  George  B.  Mangold. 
Colonial  Administration.    By  Paul  S.  Rcinsch. 
Colonial  Government.    By  Paul  S.  Reinsch. 

Commission  Government  in  American  Cities.    By  Ernest  S.  Bradford. 
Democracy  and  Social  Ethics.     By  Jane  Addams. 
Economic  Crises.    By  E.  D.  Jones. 

Education  and  Industrial  Evolution.     By  Frank  Tracy  Carlton. 
Elements  of  Sociology.     By  F.  W.  Blackmar. 

Essays  on  the  Monetary  History  of  the  United  States.    By  C.  J.  Bullock. 
Foundations  of  Sociology.    By  E.  A.  Ross. 
Government  in  Switzerland.    By  John  M.  Vincent. 
Great  Cities  in  America;  Their  Problems  and  Their  Government.    By 
Delos  F.  Wilcox. 


CITIZENS'  LIBRARY  OF  ECONOMICS,  POLITICS  AND  SOCI- 
OLOGY (Continued). 

History  of  Political  Parties  in  the  United  States.    By  J  Macy. 

International  Commercial  Policies.     By  G  M.  Fisk. 

Introduction  to  Business  Organization.     By  S.  E.  Sparling. 

Introduction  to  the  Study  of  Agricultural  Economics.     By  H.  C.  Taylor. 

Irrigation  Institutions:  A  Discussion  of  the  Growth  of  Irrigated  Agri- 
culture in  the  Arid  West.  By  E.  Mead. 

Money:  A  Study  of  the  Theory  of  the  Medium  of  Exchange.  By 
David  Kinley. 

Monopolies  and  Trusts.    By  R.  T.  Ely. 

Municipal  Engineering  and  Sanitation.    By  M.  N.  Baker. 

Newer  Ideals  of  Peace.    By  Jane  Addams. 

Principles  of  Anthropology  and  Sociology,  The,  in  their  Relations  to 
Criminal  Procedure.  By  M.  Parmelee. 

Railway  Legislation  in  the  United  States.    By  B.  H.  Meyer. 

Social  Control :    A  Survey  of  the  Foundation  of  Order.    By  E.  A.  Ross. 

Some  Ethical  Gains  Through  Legislation.    By  Mrs.  Florence  Kelley. 

Spirit  of  American  Government,  The.    By  J.  A.  Smith. 

Studies  in  the  Evolution  of  Industrial  Society.    By  R.  T.  Ely. 

Wage-Earning  Women.    By  Annie  M.  MacLean. 

World  Politics.    By  Paul  S.  Reinsch. 

NEW  SERIES 

American  Municipal  Progress.    Chapters  in  Municipal  Sociology.    By 

C.  Zueblin. 

Progressive  Movement,  The.    By  Benjamin  P.  DeWitt.    $1.50. 
Wealth  and  Income  of  the  People  of  the  United  States.    By  Willford 

I.  King. 

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